F Corp. has 100 shares of outstanding stock, all owned by John. John bought the shares 10 years ago for $20,000, or $200 per share. During the year, the corporation redeemed 10 shares of John’s stock for $30,000. Assuming that the corporation has substantial E & P, which of the following is true?John must report a capital gain of $10,000.
John must report a capital gain of $28,000.
John must report dividend income of $28,000.
John must report dividend income of $30,000.
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