Question: John died on March 3. His gross estate of $2.5 million includes First Corporation stock (400 of the 1,000 outstanding shares) worth $1.5 million. Johns

John died on March 3. His gross estate of $2.5 million includes First stock (400 of the 1,000 outstanding shares) worth $1.5 million. John’s wife, Myra, owns the remaining 600 shares. Deductible funeral and administrative expenses total $250,000. John, Jr. is the sole beneficiary of John’s estate. Estate taxes amount to $350,000.
a. Does a redemption of First stock from John’s estate, John, Jr., or John’s wife qualify for sale treatment under Sec. 303?
b. On September 10, First redeems 200 shares of its stock from John’s estate for $800,000. How does the estate treat this redemption for tax purposes?

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