Pacific Corporation’s stock is owed as follows:

Adam, an individual	40
Betty, Adam’s sister	40
Louis, Adam’s son	20
Total shares	100

Pacific Corporation redeems 40 of Adam’s shares. Adam wants to continue to work for Pacific Corporation part-time for the next two years.

Will the redemption qualify under Section 302? Explain your answer.

Answer rating: 100% (QA)

Section 302 of the Internal Revenue Code pertains to the treatment of redemptions of stock by a corp... View the full answer