What are the tax consequences to Wayne and Judy?
Staton Inc. has four unrelated shareholders, Wayne, Judy, Erica, and Josh; there respective bases in the shares are $15,000, $17,000, $19,000, and $21,000; and each shareholder own 100 shares of stock. On November 8 Staton Inc redeemed 50 shares of Wayne's stock for $10,000 and 20 shares of Judy's stock for $4,000. Stations current E&P was $30,000.
What are the tax consequences to Wayne and Judy?
Homework Answers
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In each of the problems below please describe the tax consequences to the parties involved in the transaction. The answer should include an analysis of whether Section 351 applies to the transaction (unless the problem already states that Section 351 applies) and the computations for any recognized gain, the tax basis of any stock received by the shareholders; the tax basis of any property received by the corporation and the holding period of the stock/property. 1. On January 1, 2019...
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