Determine the tax consequences to the shareholder

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Problem - Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholder's basis in the Sunset stock involved is $50,000.

Required -

a. Determine the tax consequences to the shareholder if the distribution is a nonqualified stock redemption.

b. Determine the tax consequences to the shareholder if the distribution is a qualifying stock redemption.

c. Determine the tax consequences to the shareholder if the distribution is pursuant to a complete liquidation of Sunset.

Reference no: EM132646726

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