Question

Hound owns 600 shares of stock in View Corporation, which represents 60% of View’s only class...

Hound owns 600 shares of stock in View Corporation, which represents 60% of View’s only class of stock outstanding. All shareholders are unrelated to each other. Hound’s basis in the stock is $60,000 ($100 per share). Hound redeems 320 shares of Hound’s stock for $52,000. What is Hound’s basis in his remaining shares?

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Answer #1

Answer B 28000

Explanation:-

total number of shares of hounds= Total shares/% of holding

= 600/60%

=1000

Remaining shares after sale= total shares available -shares reedem

=600-320

=280

Baisis in value = remaining share after sale*value per share

=280*100

=28000

Explanation for wrong answer

A32000 is the amount of share sold it is calculated by 320*100 so question is asking for remaining it can not be the answer

C60000 is the amount is already hold which is calculated by 600*100, so same can not be the answer as question asked for remaining shares

D 52000 is the amount received on selling the shares in the current market but the question specifically asked about the baisis

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