Julio Gonzales is in the 32% tax bracket. He acquired 11,000 shares of stock in Gray Corporation seven years ago at a cost of $40 per share. In the current year, Julio received a payment of $330,000 from Gray Corporation in exchange for 5,500 of his shares in Gray. Gray has E & P of $6,000,000. What income tax liability would Julio incur on the $330,000 payment in each of the following situations? Assume that Julio has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%.

a.The stock redemption qualifies for sale or exchange treatment. Julio has capital gain of ......... $ Julio's tax liability would be $.........

b. The stock redemption does not qualify for sale or exchange treatment.

Julio has dividend income of..........$. Julio tax liability would be $.......