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What are the tax consequences to Monica

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Question - Monica owns all 100 shares of Crown Corporation stock having a $1.05 million FMV. Her basis in the stock is $600,000. Crown's E&P balance is $ 450,000. Matt would like to purchase the stock but wants only the corporation's non-cash assets valued at $ 600,000. Mattis willing to pay $600,000 for these assets.

Required -

a. What are the tax consequences to Monica, Matt, and Crown if Matt purchases 75 shares of Crown stock for $600,000 and Crown redeems Monica's remaining 25 shares for $450,000 cash?

b. How would your answer to Part a change (if at all) if Crown first redeems 25 shares of Monica's stock for $450,000 and then Matt purchases the remaining 75 shares from Monica for $600,000?

Reference no: EM133103574

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