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Determine the amount and character of a redemption

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Reference no: EM132511962

A & W corporation is owned as follows (800 shares issues and outstanding):

Mr. B Sr. 25% (200 shares)

Mr. C Sr. (B's brother) 25% (200 shares)

Mrs. B ( B Sr.'s wife) 10% ( 80 shares)

Mr. B Jr. 10% ( 80 shares)

Mr. C. Jr. 15% (120 shares)

Mrs. C (C Sr.'s wife) 5% ( 40 shares)

Darrel (Mr. C Sr.'s grandson) 10% ( 80 shares)

TOTAL 100%

Question 1: Determine the amount and character of a redemption on the shareholder if One-half of Mrs. B's shares are redeemed for $60,000 in cash. Mrs. B's basis in the redeemed shares is $20,000. E&P in the corporation is $1,000,000.

Reference no: EM132511962

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