Read the article below. prepare a memorandum to your manager addressing the following issues:

1. Does it appear that the $8.8 billion payment to Seagram is a dividend or redemption?

2. Would Seagram prefer for this to be treated as a dividend or as a redemption?

Seagram CEO Edgar Broniman Jr. is touting the tax benefits of selling its $8.8 billion DuPont stake back to DuPont and it's easy to see why. How? In 1981, Dupont and Montreal-based Seagram were locked in a takeover battle to buy oil company Conoco. DuPont won and exchanged its own stock for Conoco stock. But through its Conoco shares, Seagram got about 156 million Dupont shares. Later, Seagram bought more shares directly from Dupont at various prices, boosting its Dupont ownership to 23%. To finance its $5.6 billion purchase of 80% of entertainment giant MCA, Thursday Seagram sold $156 million Dupont shares back to Dupont for $56.25 a share. DuPont paid for it with $1 billion in cash, $7.3 billion in 90-day DuPont notes and $440 million worth of warrant. Seagram still owns 8 million DuPont shares. The warrants entitle Seagram to buy back $156 million Dupont shares in 1997, '98' or '99' at much higher prices. (To IRS, tax experts say, Seagram owns as many shares as it did before.- Assume this statement is true for tax purpose.