Assumption X is owned entirely by two individuals A and B who are unrelated unless otherwise stated. A owns 60 shares of X common stock bought in one transaction for $600. Y owns 40 shares of X common stock with the basis of $30 per share. The stocks fair market value is $20 per share. Xs E & P is $500. X uses the accrual method of accounting.

What are the results to the parties from the alternative transactions below. Discuss amount and character of the shareholder income or loss and impact on E&P.

A. A sells 30 shares back to X for $600. B. A sells 20 shares back to ask for $400 C. What would result to B if X redeems 10 of Bs Shares for $200.

D. What is the minimum number of shares that B must be redeemed to ensure sale or exchange treatment.

E. A sells 10 shares back to X for $200. F. A sells 30 shares back to X for $600. Shortly thereafter, B sells 10 shares back to X for $200 in an exchange that had been agreed-upon in the preceding year. What would result to B? What would result to A if B sold 11 shares rather than 10? G. A sells 30 shares back to ask for $600. What would result of A&B are related in the following alternative ways:

i. B is As brother and their father is living.

ii. B is it is equal partner in a two-person partnership.

iii B is a corporation in which X in which A owns 1/2 of the stock

Alternative A owns 45% of the stock.

A owns 45% of the stock and C, As father