Leon Owns 750 Shares of the 2,000 Outstanding Shares of Crane

Multiple Choice

Leon owns 750 shares of the 2,000 outstanding shares of Crane Corporation (E & P of $900,000) . None of the other shareholders of Crane is related to Leon. Leon acquired his Crane shares 10 years ago for $80,000. Crane has operated several trades or businesses for more than 5 years. In the current year, Crane sells the assets of one of those trades or businesses and distributes the proceeds from the asset sale to the shareholders in a pro rata stock redemption. In this transaction, Leon receives $250,000 in redemption of 300 shares of Crane. As a result of this transaction, Leon will recognize:

A) $218,000 dividend income.
B) $250,000 dividend income.
C) $218,000 long-term capital gain.
D) $250,000 long-term capital gain.
E) None of these.