Research Problem. Mr. Aslak owns all the stock in Shoes Inc., which owns 85 percent of Skiing Inc. Ms. Quinn, the manager of Skling, wishes to share in the profits of the prosperous firm by buying 5 percent of its stock. Shoes Inc. then distributes its stock interest in Skling to Mr. Aslak, who then sells a 5 percent interest in Skiing to Ms. Quinn for $15,000. Assume the sale of stock to a key employee has a valid business and corporate purpose. How would the IRS view the above transaction?

Answer rating: 100% (QA)

The IRS would view the above transaction as a taxable stock redemption by ... View the full answer