Missy owns all 100 shares of Sand Corporation stock having a $1.15 million FMV. Her basis in the stock is $450,000. Sand'sE&P balance is $700,000. Peter would like to purchase the stock but wants only the corporation's non-cash assets valued at $850,000. Peter is willing to pay $850,000 for these assets.

How would your answer to Part a change (if at all) if Sand first redeems 25 shares of Missy's stock for $300,000 and then Peter purchases the remaining 75 shares from Missy for $850,000?

of Missy will recognize She will recognize an additional on her sale of 75 shares of Sand Corporation stock to Peter. on the redemption of her remaining shares by Sand. of