Flintstone Corporation is owned equally by Fred and his sister Wilma, each of whom holds 1,000 shares in Flintstone. Wilma wants to reduce her ownersh
Flintstone Corporation is owned equally by Fred and his sister Wilma, each of whom holds 1,000 shares in Flintstone. Wilma wants to reduce her ownership in the company, and it is decided that Flintstone will redeem 250 of her shares for $25,000 per share on December 31 of this year. Wilma’s tax basis in each share is $5,000. Flintstone has current E&P of $10,000,000 and accumulated E&P at the beginning of the year is $50,000,000.