Complexity, Inc. is owned in the following manner:

Shares FMV AB

Susan 600 $480,000 $75,000

Anna 300 $240,000 $75,000

Bill 100 $ 80,000 $25,000

Susan and Bill are married, and Bill is Annas son. In April 1, 2001, Complexity redeems 500 shares of Susans stock for $400,000 worth of property. This property had an adjusted basis to Complexity of $100,000. On October 1, 2001, Complexity redeemed 50 shares of Bills stock for $40,000 cash. Complexity has positive current earnings and profits, and accumulated earnings and profits of $3 million.

What are the tax consequences, if any, to Complexity?

What are the tax consequences, if any, to Susan?

What are the tax consequences, if any, to Bill?

What basis will Susan have in her Complexity stock after the transaction?

What basis will Bill have in his Complexity stock after the transaction?