Ethel, Hannah, and Samuel, Unrelated Individuals, Own the Stock in Broadbill

Multiple Choice

Ethel, Hannah, and Samuel, unrelated individuals, own the stock in Broadbill Corporation (E & P of $700,000) as follows: Ethel, 300 shares; Hannah, 300 shares; and Samuel, 400 shares. Broadbill redeems 200 of Samuel's shares (basis of $175,000) for $250,000. If Samuel's stock is a capital asset and has been held for over three years, Samuel has:

A) A long-term capital gain of $75,000.
B) A short-term capital gain of $75,000.
C) Ordinary income of $250,000.
D) Ordinary income of $75,000.
E) None of these.