ABC Inc. has 1,000 shares of stock outstanding owned as follows:

Shareholder	Shares Owned	Adjusted Basis
K	100	$10,000
S	100	$10,000
M	200	$20,000
U	600	$60,000

All shareholders paid $100 per share for their stock. ABC Inc. has substantial earnings and profits. All shareholders are unrelated.

A) ABC Inc. redeemed 400 shares of U’s stock for $400,000. What is the effect of the redemption on U?

B) Same as above except ABC Inc. redeemed 200 shares of U's stock for $200,000. What is the effect of the redemption on U?

C) Which of the redemption provisions is being used here?

D) What is the backup provision if the redemption under the provision cited in Part C fails?