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Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with...

Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with a basis of $8,800, and Clyde owns the remaining 40 shares with a basis of $17,500. At year end, Getaway is considering different alternatives for redeeming some shares of stock. Evaluate whether each of these stock redemption transactions qualify for sale or exchange treatment.
A)Getaway redeems 10 of Bonnie’s shares for $3,000. Getaway has $20,000 of E&P at year end and Bonnie is unrelated to Clyde

if Bonnie owns 60% before the redemption how much after the redemption?

B)Getaway redeems 24 of Bonnie’s shares for $6,000. Getaway has $20,000 of E&P at year end and Bonnie is unrelated to Clyde

If Bonnie owns 60% before the redemption how much will bonnie own after the redemption?

C)Getaway redeems 10 of Clyde’s shares for $2,500. Getaway has $20,000 of E&P at year end and Clyde is unrelated to Bonnie. Clyde owns 40% before the redemption and 33% after the redemption (30/90).

If Clyde owns 40% before the redemption how much will he own after the redemption?

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ekkarill92 answered 1 year ago
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