The adjusted gross estate of Howard Stark, decedent, is $12 million. Included in the gross estate is all of the stock in Stark Munitions, Inc. (E & P of $1.3 million), valued at $4.6 million as of the date of Howard’s death. Howard had acquired the stock twelve years ago at a cost of $900,000. Estate taxes, funeral and administration expenses for Howard’s estate are $2.3 million. Stark Munitions redeems one-half of the stock from Howard’s estate with property [FMV: $2.3 million, basis: $1.9 million]. Which of the following is a correct statement regarding the tax consequences of this redemption?

	a.	The estate will have a basis of $2.3 million in the property received.
	b.	Stark Munitions will reduce its E & P by $1,300,000.
	c.	The estate will have a $1.4 million dividend.
	d.	The estate will have a $1.4 million log term capital gain.
	e.	None of the above.

Answer rating: 100% (QA)

answer is a The estate will have a basis of 19 million in the property received It is clea... View the full answer