Mr. A and Mrs. B, husband and wife, each owns 1,000 shares (of $100 each) in AB Corp. representing 100% ownership. All of the stock was purchased for $200,000 several years ago. Mr. A is due for retirement and therefore, the Corporation redeems his 1,000 shares. But Mr. A, being a detailed oriented C.P.A., still serves as a director of the corporation. Assume Corporation has adequate E&P and the FMV of the Corporation shares are still the same as the original cost, how will the redemption of Mr. As shares be treated for the tax purpose? What happens to his basis of stock ($100,000)? Explain.