McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 20

EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $200,000.The redemption represented 20 percent of the corporation's outstanding stock.The redemption was treated as an exchange by the shareholder.By what amount does EG reduce its total E P as a result of the redemption under the following E P assumptions?
a.EG's total E P at the time of the distribution was $2,000,000.b.EG's total E P at the time of the distribution was $500,000.