Assume in Problem 34 that Julio takes a capital loss carryover of $50,000 into the current tax year. Julio records no other capital gain transactions during the year. What amount of the capital loss may Julio deduct in the current year in the following situations? 

a. The payment from Gray Corporation is a qualifying stock redemption for tax purposes. 

b. The payment from Gray is a nonqualified stock redemption for tax purposes. 

c. If Julio had the flexibility to structure the transaction as described in either part (a) or (b), which form would he choose? 

Data From Problem 34

Julio is in the 32% tax bracket. He acquired 2,000 shares of stock in Gray Corporation seven years ago at a cost of $50 per share. In the current year, Julio received a payment of $150,000 from Gray Corporation in exchange for 1,000 of his shares in Gray. Gray has E & P of $1,000,000. What tax liability would Julio incur on the payment in each of the following situations? Assume that Julio has no capital losses.