Samson Corporation has 1,000 shares of common stock outstanding. Sal owns 560 shares, Rita owns 250, Shares, Susan owns 190 shares. None of the owners are related. On Aug. 14 Samson redeemed 150 shares from Sal. Sal's adjusted basis in the 560 shares was 28,000. In return for the 150 shares, Sal recieved $17,000. Samsons Current E&P was 45,000. Sal perfers to receive sale or exchange treatment.

A) Indicate if Sal Might be able to receive sale or exchange treatment.

B) Indicate the tax consequences to Sal if the redemption is treated as a dividend or if it is treated as a sale or exchange.

Answer rating: 100% (QA)

A Sal might be able to receive sale or exchange treatment for the redemption of his shares if certain criteria are met One of the key conditions for s... View the full answer