Viking Corporation Is Owned Equally by Sven and His Wife

Multiple Choice

Viking Corporation is owned equally by Sven and his wife, Olga, each of whom hold 100 shares in the company.Viking redeemed 75 shares of Sven's stock for $2,000 per share on December 31, year 1.Viking has total (current plus accumulated) E&P of $500,000.What are the tax consequences to Viking as a result of the stock redemption?

A) No reduction in E&P as a result of the exchange.
B) A reduction of $150,000 in E&P as a result of the exchange.
C) A reduction of $187,500 in E&P as a result of the exchange.
D) A reduction of $375,000 in E&P as a result of the exchange.