DATE: December 2, 2021 FROM: Astia Jackson SUB]ECT: Crane Corporation Today I advised the president of Crane Corporation regarding his November 25 letter. Crane Corporation had 2,000 shares of stock outstanding. It redeemed S00 shares for $370,000, when it had paid-in capital of $300,000 and E8.P of $1,200,000. The redemption qualifles for sale or exchange treatment for the shareholder. Crane incurred $13,000 of accounting and legal fees with respect to the redemption transaction and $18,500 of interest expense on debt incurred to finance the redemption. At issue: What is the change in Crane Corporation's E \& D as a result of the redemption? Also, are the redemption expenditures deductible by Crane? Conclusion: Under 5312(n)(7), the E 8.P account of a corporation is amount not in excess of the ratable share of the E \& P of the distributing corporation attributable to the stock redeemed. Since Crane Corporation redeemed \%s of its stock, the change in E&.P is s specifically v is deduction for rodemption expenditures. DATE: December 2, 2021 FROM: Astia Jackson SUB]ECT: Crane Corporation Today I advised the president of Crane Corporation regarding his November 25 letter. Crane Corporation had 2,000 shares of stock outstanding. It redeemed S00 shares for $370,000, when it had paid-in capital of $300,000 and E8.P of $1,200,000. The redemption qualifles for sale or exchange treatment for the shareholder. Crane incurred $13,000 of accounting and legal fees with respect to the redemption transaction and $18,500 of interest expense on debt incurred to finance the redemption. At issue: What is the change in Crane Corporation's E \& D as a result of the redemption? Also, are the redemption expenditures deductible by Crane? Conclusion: Under 5312(n)(7), the E 8.P account of a corporation is amount not in excess of the ratable share of the E \& P of the distributing corporation attributable to the stock redeemed. Since Crane Corporation redeemed \%s of its stock, the change in E&.P is s specifically v is deduction for rodemption expenditures