b$.$ If Grace is a corporation and the distribution is a nonqualified stock redemption, then it would have dividend income of $fill in the blank d$0$c$683$ff$4$fc$3$fa$3\_1$

$400,000$

$,$ and $fill in the blank d$0$c$683$ff$4$fc$3$fa$3\_2$

$200,000$

is subject to tax because of the

dividends received deduction

$.$ Teal Corporation would have a

gain

of $fill in the blank d$0$c$683$ff$4$fc$3$fa$3\_5$

$250,000$

$.$

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c$.$ If the $$400,000$ distribution is a qualifying stock redemption and half of Grace's $($an individual$)$ stock $($basis of $$90,000)$ is redeemed in the transaction, then Teal Corporation would have a

gain

of $fill in the blank $750272$fb$5049054\_2$

$250,000$

$.$ Grace would have a

capital gain

of $fill in the blank $750272$fb$5049054\_4$

$310,000$

$.$

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d$.$ If the distribution is a qualifying stock redemption, half of Grace's stock $($basis of $$90,000)$ is redeemed in the transaction, and if Grace is a corporation, then it would have

a capital gain

of $fill in the blank $815$d$9305205304$f$\_2$

$310,000$

$,$ and Teal Corporation would have a

gain

of $fill in the blank $815$d$9305205304$f$\_4$

$250,000$

$.$

e$.$ Which option would Grace choose if it were a corporation?

The distribution as a nonqualified stock redemption.

Which option would Grace choose if she were an individual?

The distribution as a qualifying stock redemption.

Which option would Teal choose?

The options are equal to Teal.