68. Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows: Joe Jackson 400 Mike Jackson (Joes son) 200 Jane Jackson (Joes daughter) 200 Vinnie Price (unrelated) 200 Total 1,000 Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000. During this year, the corporation made the following distributions to its shareholders: 03/31: Paid a dividend of $10 per share to each shareholder ($10,000 in total). 06/30: Redeemed 200 shares of Joes stock for $200,000. Joes basis in the 200 shares redeemed was $100,000. 09/30: Redeemed 60 shares of Vinnies stock for $60,000. His basis in the 60 shares was $36,000. 12/31: Paid a dividend of $10/share to each shareholder ($7,400 in total). Required:

a) Determine the tax status of each distribution made this year. (Hint: First, consider if the redemptions are treated as dividend distributions or exchanges.)

b) Compute the corporations accumulated E&P at January 1 of next year.

c) Joe is considering retirement and would like to have the corporation redeem all of his shares for $100,000 plus a 10-year note with a fair market value of $300,000. 1. What must Joe do or consider if he wants to ensure that the redemption will be treated as an exchange? 2. Could Joe still act as a consultant to the company?

d) Thriller Corporation must pay attorneys fees of $5,000 to facilitate the stock redemptions. Is this fee deductible?