Adams, Inc. is a family-owned business that has one class of stock. There are 600 shares allocated equally to Al Adams, Bev Adams, Curt Adams, Derek Adams, Elroy Adams and Fred Murray. Fred is not related to the Adams family. He would like to sell has shares back to Adams, Inc. Fred's shares have a FMV of $200,000 and a tax basis of $50,000. The redemption is planned for December 31.

Is it possible to determine if there will be a dividend or capital gain from the information provided? If so, calculate it. If not, what information would you need?

Would this transaction meet the three IRS change in stock ownership tests? Explain each test and the results.

Under what circumstances would Fred be deemed to have constructive ownership of more than 100 shares?