Question - Tangerine, Inc. has 2,000 shares of stock authorized and 1,000 shares outstanding. The shares are owned by Madison (700 shares) and Jessica (300 shares). Madison's adjusted basis for her stock is $100,000 and Jessica's adjusted basis for her stock is $50,000. Tangerine's earnings and profits are $100,000. Tangerine redeems 150 of Jessica's shares for $50,000. Determine the amount of Jessica's recognized gain (1) if she is Madison's mother and (2) if they are unrelated.
a. $0 and $0.
b. $50,000 and $50,000.
c. $50,000 and $-0-.
d. $50,000 and $25,000.
e. None of the above.