Forno Corp. has outstanding 400 shares of common stock of which A,B,C, and D each own 100 shares. No stock is considered constructively owned by A, B, C, or D under Code Section 318. In one transaction, Forno Corporation redeems 55 shares from A, 25 shares from B, and 20 shares from C. The earnings and profits of Forno corp. was $100,000 on the edate of the redemption. The redemption price was $100 per share. The shareholders purhcased their stock more than one year ago for $80 per share.

a. What is the tax effect to A of the redemption?

b. What is the tax effect to B of the redemption?

c. What is the tax effect to C of the redemption?

Hint (Dividends? longterm capital gain? no effect?)