Teal Corporation, with E & P of$2,000,000, distributes property with a basis of $150,000  and a fair market value of $400,000 to Grace. She owns 15% of the outstanding Teal  shares.  What are the tax consequences to Teal Corporation and to Grace if the distribution is  a nonqualified stock redemption?  What are the tax consequences in part (a) if Grace is a corporation?  What are the tax consequences to Teal Corporation and to Grace if the distribution is  a qualifying stock redemption? Assume that Grace’s basis in the redeemed shares is  $90,000.  What are the tax consequences in part (c) if Grace is a corporation?

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
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Teal Corporation, with E & P of$2,000,000, distributes property with a basis of $150,000  and a fair market value of $400,000 to Grace. She owns 15% of the outstanding Teal  shares. 

  1. What are the tax consequences to Teal Corporation and to Grace if the distribution is  a nonqualified stock redemption? 
  2. What are the tax consequences in part (a) if Grace is a corporation? 
  3. What are the tax consequences to Teal Corporation and to Grace if the distribution is  a qualifying stock redemption? Assume that Grace’s basis in the redeemed shares is  $90,000. 
  4. What are the tax consequences in part (c) if Grace is a corporation?
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