Question

Betty's adjusted gross estate is $18 million. The death taxes and funeral and administration expenses of her estate total $2.4 million. Included in Betty's gross estate is stock in Heron Corporation, valued at $6.6 million as of the date of her death. Betty had acquired the stock six years ago at a cost of $1,620,000. If Heron Corporation redeems $2.4 million of Heron stock from the estate, the transaction will qualify under $ 303 as a redemption to pay death taxes and receive sale or exchange treatment. Select one: True False

Answer 1

The statement is true as redemption of $ 2.4 million is substantial reduction in a shareholder's ownership interest in the corporation. True.