C owns 60 shares and D owns 40 shares of Z Corporation, representing all of Z’s outstanding shares. C and D are father and son. Z redeems all of C’s stocks. C stays on as Z’s president with compensation tied to Z’s profits.

1. 	a.	This redemption is treated as a sale or exchange under 302(b)(3).
   	b.	This redemption is dividend since C has not completed termination in his interest in Z because of the role as president.
   	c.	None of the above.

C owns 60 shares and D owns 40 shares of Z Corporation, representing all of Z’s outstanding shares. C’s stock is entirely redeemed for a note. C is D’s father. D hates C.

1. 	a.	This is a complete termination of interest under 302(b)(3).
   	b.	This is a complete termination of interest under 302(b)(3) if a family waiver of attribution is obtained.
   	c.	In all court circuits, the family hostility alone may prevent family attribution.
   	d.	B and C.
   	e.	None of the above.

Answer rating: 100% (QA)

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