Redemption qualifies for sale or exchange treatment

Reference no: EM13152924

Ali, a corporate executive, is in the 35% tax bracket. He acquired 1,000 shares of stock in Cardinal Corporation seven years ago for $200 a share. In the current year, Cardinal Corporation (E & P of $1 million) redeems all of his shares for $500,000. What are the tax consequences to Ali if:

a. The redemption qualifies for sale or exchange treatment, and Ali has no other transactions in the current year involving capital assets?

b. The redemption does not qualify for sale or exchange treatment?

Reference no: EM13152924

Questions Cloud

Explain chemical equation describing the freezing process : Write a chemical equation describing the condensation process for CO2 and a chemical equation describing the freezing process for CO2. For each process discuss the change in enthalpy and entropy that occurs.

Determining owner capital account : Also, owner withdrawals during 2009 totaled $48,000. Assuming no other changes to owner's capital, the balance in the owner's capital account at the end of 2009 would be:

What is the approximated value of company before-tax marr : The company uses an effective income tax rate of 40%, and the after-tax MARR of 15% per year. What is the approximated value of the company's before-tax MARR?

Outline a microeconomic reform issue : Outline a microeconomic reform issue that is relevant to the Australian economy and how successful do you think these reform measures were and say why referring to some data or research that has been performed?

Redemption qualifies for sale or exchange treatment : The redemption qualifies for sale or exchange treatment, and Ali has no other transactions in the current year involving capital assets?

Explain chemical engineer measured a less-than-expected : During studies of the reaction below, 2 N2H4(l) + N2O4(l) ? 3 N2(g) + 4 H2O(g) a chemical engineer measured a less-than-expected yield of N2 and discovered that the following side reaction occurs

Park hyatt philly discussed in the text : Consider the example of the Park Hyatt Philly discussed in the text. Recall that the full fare is $225, the expected full-fare demand is ~P(27.3), the discount fare is $159, and there are 118 king/queen rooms.

What is the difference in the amount of depreciation : he company will use the truck for eight years and will depreciate it over this period time with the SL method. What is the difference in the amount of depreciation that would be claimed in year five

Budgetary control system : Identify the problem that appear to exist in ferguson and sons manufacturing company's budgetary control system and explain how the problem are likely to reduce effectiveness of the system.

User Account

All Pages