3.(TCO 4) Howard is the sole shareholder of Queen Corporation, having a basis of $90,000 in 1,000 shares of Queen common stock. Last year, Queen (E&P of $500,000) issued a dividend of 2,000 shares of preferred stock to Howard. On the date of distribution, the fair market values per share of the common and preferred stocks were $160 and $20, respectively. In the current year, Queen (E&P of $720,000) redeems all of Howard's preferred stock for its fair market value of $40,000.

(I) What are the tax consequences of the preferred stock dividend to Howard?

(II) What are the tax consequences of the stock redemption to Howard?

(III) What are the tax consequences of the stock redemption to Queen?(Points : 20)