Hazel, Emily, and Frank, Unrelated Individuals, Own All of the Stock

Multiple Choice

Hazel, Emily, and Frank, unrelated individuals, own all of the stock in Wren Corporation (E & P of $1.2 million) as follows: Hazel, 1,500 shares; Emily, 300 shares; and Frank, 200 shares. Wren redeems 900 of Hazel's shares (basis of $210,000) for $625,000. With respect to the distribution in redemption of the stock:

A) Hazel has a capital gain of $415,000.
B) Hazel has a capital gain of $625,000.
C) Hazel has dividend income of $415,000.
D) Hazel has dividend income of $625,000.
E) None of these.