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Bart, a 50% owner of Mercury Corporation's common stock, receives a distribution of a new class of Mercury preferred stock having a $40,000 FMV. Bart's

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Bart, a 50% owner of Mercury Corporation's common stock, receives a distribution of a new class of Mercury preferred stock having a $40,000 FMV. Bart's basis in the Mercury common stock is $30,000, whose FMV is $80,000 on the distribution date. One year later the corporation redeems the preferred stock for $75,000. At the time the stock was issued, the corporation's current and accumulated E&P was $80,000. At the end of the year of redemption the current and accumulated E&P is $25,000. No other distributions out of E&P were made in the year of redemption. What are the tax consequences of the transaction? Bart, a 50% owner of Mercury Corporation's common stock, receives a distribution of a new class of Mercury preferred stock having a $40,000 FMV. Bart's basis in the Mercury common stock is $30,000, whose FMV is $80,000 on the distribution date. One year later the corporation redeems the preferred stock for $75,000. At the time the stock was issued, the corporation's current and accumulated E&P was $80,000. At the end of the year of redemption the current and accumulated E&P is $25,000. No other distributions out of E&P were made in the year of redemption. What are the tax consequences of the transaction

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