In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution. For situations 1 – 2, the ownership of a corporation is: Andy 40 shares Barb 20 shares Cindy 40 shares Situation 1: The corporation redeems 10 shares of stock held by Barb. Situation 2: The corporation redeems 30 shares of stock held by Cindy. Situation 3: The corporation redeems 15 shares of stock held by Andy. Situation 4: Same facts as Situation 1 except Andy is Barb’s father.
In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution. For situations 1 – 2, the ownership of a corporation is: Andy 40 shares Barb 20 shares Cindy 40 shares Situation 1: The corporation redeems 10 shares of stock held by Barb. Situation 2: The corporation redeems 30 shares of stock held by Cindy. Situation 3: The corporation redeems 15 shares of stock held by Andy. Situation 4: Same facts as Situation 1 except Andy is Barb’s father.
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 51P
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In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution.
For situations 1 – 2, the ownership of a corporation is:
Andy 40 shares
Barb 20 shares
Cindy 40 shares
Situation 1: The corporation redeems 10 shares of stock held by Barb.
Situation 2: The corporation redeems 30 shares of stock held by Cindy.
Situation 3: The corporation redeems 15 shares of stock held by Andy.
Situation 4: Same facts as Situation 1 except Andy is Barb’s father.
To answer this be sure to first review the “Attribution Rules”
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