52.) Crane Corporation has 2,000 shares of stock outstanding. It redeems 500 shares for $370,000 when it has paid-in capital of $300,000 and E & P of $1.2 million. The redemption qualifies for sale or exchange treatment for the shareholder. Crane incurred $13,000 of accounting and legal fees in connection with the redemption transaction. What is the effect of the distribution on Crane Corporation?s E & P? Also, what is the proper tax treatment of the redemption expenditures? Prepare a letter to the president of Crane Corporation (506 Wall Street, Winona, MN 55987) and a memo for the file in which you explain your conclusions.
Paper#7534 | Written in 18-Jul-2015Price : $25