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What are the tax consequences of the stock redemption

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Reference no: EM131793004

Question - Tan Corporation (E&P of $700,000) has 1,000 shares of stock outstanding owned by two unrelated individuals, Jacob (600 shares) and Julie (400 shares). Both shareholders paid $75 per share for the stock six years ago. In the current year, Tan Corporation redeems 300 shares of Jacob's stock for $320,000.

a. What are the tax consequences of the stock redemption to Jacob?

b. What are the tax consequences of the stock redemption to Tan Corporation?

Reference no: EM131793004

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