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safezone safezone
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John owns 70% of the May Corporation stock and 60% of the June Corporation stock. John sells one-half of his interest in May Corporation to June Corporation for $45,000. The E&P accounts of May and June are $25,000 and $35,000, respectively. The result would be that
A) John has sold his stock and reports a capital gain or loss.
B) John has sold his stock and reports a capital gain but no loss.
C) the transaction is treated as a contribution to May's capital and a redemption of June stock.
D) the sale is recast as a dividend paid to John, first by June and then by May.
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Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts

Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts


Edition: 27th
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