What are the tax consequences to checker

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Question - Comparison of Dividends and Redemptions. Bailey is one of four equal unrelated shareholders of Checker Corporation. Bailey has held Checker stock for four years and has a basis in her stock of $40,000. Checker has $280,000 of current and accumulated E&P and distributes $100,000 to Bailey.

a. What are the tax consequences to Checker and to Bailey if Bailey is an individual and the distribution is treated as a dividend?

b. In Part a, what would be the tax consequences if Bailey were a corporation?

c. What are the tax consequences to Checker and to Bailey (an individual) if Bailey surrenders all her stock in a redemption qualifying for sale treatment?

d. In Part c, what would be the tax consequences if Bailey were a corporation?

e. Which treatment would Bailey prefer if Bailey were an individual? Which treatment would Bailey Corporation prefer.

Reference no: EM131790033

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