Horace owns stock in Kumquat, Inc. Since the stock of Kumquat, a C-corporation, is not traded on an exchange, Kumquat must redeem the stock in order for shareholders to "sell" their stock. Kumquat has $1,000,000 in E&P. In 2022, Horace would like to redeem 700 of his 800 shares of stock. Thus, after the stock is redeemed, he would own 100 shares of stock. Kumquat has agreed to buy-back 700 shares of Horace's stock for $40,000. Horace's paid $50/share for his stock in 2000. Before this redemption, the stock in Kumquat is owned as follows: Horace 800 shares Elaine (Horace's sister) 2,200 shares Clyde (Horace's son) 600 shares Plum Partnership (Horace has a 10% interest) 800 shares Grape Corporation (Horace owns 60%) 800 shares a. Will this redemption be considered a qualified stock redemption or will it be considered a distribution? Justify your conclusion with calculations and the code section that supports your answer. b. What is Horace's tax liability for this redemption of stock? Assume that Horace is in the 37% tax bracket. C. Would your answer be different is Elaine was Horace's wife rather than his sister?