What are the tax consequences to Ali

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Question - Ali, a corporate executive, is in the 39.6% tax bracket. He acquired 1,000 shares of stock in Cardinal Corporation four years ago for $50 a share. In the current year, Cardinal Corporation redeems all of his shares for $200,000. Cardinal Corporation has adequate E & P to cause any distribution to be dividend income. What are the tax consequences to Ali if:

a. The redemption qualifies for sale or exchange treatment. Calculate Ali's gain or loss if any.

b. The redemption does not qualify for sale or exchange treatment? Calculate Ali's gain or loss if any.

Reference no: EM132903613

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