5. Rasputin owns 500 shares of the total outstanding stock of 750 shares for Magenta Company. His stock basis is $50,000. Rasputin, subsequently, sells 250 of his shares back to Magenta Company for $20,000. Magenta Company has E & P of $100,000. Rasputin" sale of his stock to Magenta Corporation will be treated as (show work, as to why): A) dividend income B) a sale transaction C) a return of capital D) some other treatment Slides 31 & 31 & 33, Chapter 4

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