[jessanqi]

In 20X4 Nugent Corporation sold for $21,000, 1,000 shares of its own $10 par value common stock that it had reacquired in 20X2: The shares were originally issued for $15 per share, and subsequently reacquired for $19 per share. For 20X4 Nugent should report a long-term capital gain of 

The answer is 0.

Is that because the sec 351 applies？

What am I missing?

Thanks in advance!!!

[aaronmo]

It's a strictly equity transaction. It only affects retained earnings and capital accounts.

[jessanqi]

Hi aaronmo,

Thank you for the help!

[Anonymous]

A company can recognize no gain or loss on purchasing and selling their own stock.

[Author]

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