Question 1: Chapter 6 AB Corporation has two shareholders, A and B.A owns 50 shares worth $5,000 (basis = $1,000) and B owns 50 shares worth $5,000 (basis = $1,000). The corporation distributes $3,000 to B in exchange for 30 shares. What are the tax consequences to B?

(a) What is Bs capital gain (if any) from the transaction?

(b) With regard to Bs remaining shares in AB Corporation, what is his basis per share?

Question 2: Chapter 5 Anne and Paul are shareholders of Android Corporation. Each has a stock basis of $10,000. Android has $12,000 of current E&P and $5,000 of accumulated E&P. Android distributes $3,000 to Anne on July 31 and to Paul $33,000 On December 1. What are the tax consequences of the distribution?

(a) What is Anns dividend income (if any)?

(b) What is Anns capital gain? (if any)?

(c) What is Pauls dividend income (if any)?

(d) What is Pauls capital gain (if any)?