ACCT 540

Fall 2023 A3

In each of the following independent situations, determine if the redemption of shares will be treated as an exchange or as a distribution.

For situations 1 2, the ownership of a corporation is:

Andy 70 shares

Barb 20 shares

Cindy 110 shares

Situation 1: The corporation redeems 10 shares of stock held by Barb.

Situation 2: The corporation redeems 30 shares of stock held by Cindy.

Situation 3: The corporation redeems 40 shares of stock held by Andy.

Situation 4: Same facts as Situation 1 except Andy is Barbs father. To answer this be sure to first review the Attribution Rules discussion in Chapter 18 of the textbook.