Question

Questions 21-24 are based on the following information:

On 8/24/x5, Hunter and 6 individuals organized M Corporation. Each received the following shares of M Corp. voting stock:

Hunter's father	2,000
Hunter's mother	2,000
Hunter	3,000
Hunter's sister	9,000
Hunter's grandfather	10,000
Hunter's friend, Bill	13,000
Hunter's wife	1,000

During the current tax year, M Corp. redeemed 2,000 of Hunter's shares for $30,000, 1,500 of his father's shares, 1,500 of his mother's shares, 3,000 of his sister's shares, and 12,000 of Bill's shares.

Hunter had a basis in the redeemed M Corp. stock of $4,000.

 

Flag question: Question 21

Question 212 pts

Before the redemption, Hunter owns the following percentage of M Corporation:

Group of answer choices

None of these.

20

17.5

56

 

Flag question: Question 22

Question 222 pts

The redemption by Hunter will qualify as a sale or exchange for tax purposes per Code § 302(b)(2) if Hunter owns less than the following percentage of M Corporation after the redemption:

Group of answer choices

44.8

50

None of these.

16

 

Flag question: Question 23

Question 232 pts

Hunter will treat the $30,000 distribution from M Corporation as follows:

Group of answer choices

$30,000 distribution subject to Code § 301

$30,000 dividend

None of these.

$26,000 capital gain

 

Flag question: Question 24

Question 242 pts

If instead M Corp. had redeemed 1,000 shares of Hunter with a $4,000 basis, 500 of his father's shares, 500 of his mother's shares, 9,000 of his grandfather's shares, and 9,000 of Bill's shares, Hunter would treat the $30,000 distribution from M Corporation as

Group of answer choices

None of these.

$30,000 dividend

$30,000 distribution subject to Code § 301

$26,000 capital gain