Threads Inc. wants to buy TicTak Corp. for $500. Purls (the sole shareholder of TicTak) wants to receive $2,000 for his 200 shares. TicTak has $1,500 available in cash and can redeem 150 of Purl's shares for $1,500. Immediately after the redemption, Threads buys Purl's remaining 50 shares for $500. At the end of the two transactions, Threads owns 100% of the shares in TicTak. What is the tax treatment to Purl? Applying Zenz, what is the buyer's bass? 2. Assume the facts as in Question 1 except, if Threads bought all shares of TikTac without any redemptions, would Thread's basis in the stock be different? 3. If Thread is intending to resell the TicTak stock for $3000 after the acquisition, would you advise Thread to acquire the stock in a Zenz transaction or without the redemption? Why or why not.

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Tax Treatment for Purl and Threads Inc 1 Purls Tax Treatment Applying the Zenz doctrine the two tran... View the full answer