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Indigo Corporation wants to transfer cash of $545,000 or property worth $545,000 to one of its shareholders, Brianna, in a redemption transaction that will
Indigo Corporation wants to transfer cash of $545,000 or property worth $545,000 to one of its shareholders, Brianna, in a redemption transaction that will be treated as a qualifying stock redemption. If Indigo distributes property, the corporation will choose between two assets that are each worth $545,000 and are no longer needed in its business: Property A (basis of $272,500) and Property B (basis of $708,500). a. Compute Indigo's recognized gain or loss if it distributes Property A in redemption of Brianna's shares. The distribution of Property A would result in a realized of $ to Indigo, of which $ is recognized. b. Compute Indigo's recognized gain or loss if it distributes Property B in redemption of Brianna's shares. The distribution of Property B would result in a realized of $ to Indigo, of which $ is recognized. c. Compute Indigo's recognized gain or loss if it sells Property B to an unrelated party, then distributes the sale proceeds in redemption of Brianna's shares. A sale of Property B to an unrelated party would result in a realized ofs to Indigo, of which is recognized.
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