Nichol Corporation has 100 shares of common stock outstanding. Nichol repurchased all of Ned's 30 shares for $35,000 cash during the current year. Ned received the shares as a gift from his mother three years ago. They have a basis to him of $16,000. Nichol Corporation has $100,000 in current and accumulated E&P. Ned's mother owns 40 of the remaining shares; unrelated individuals own the other 30 shares. What tax issues should be considered with respect to the corporation's purchase of Ned's shares? Answer: . . . . What is Ned's stock ownership before and after the redemption? Are any shares attributed to Ned from his mother? Can Ned elect to waive the family stock attribution rules? What is the amount and character of Ned's gain or income on the stock redemption? What is Ned's basis in the 30 shares of stock he received as a gift from his mother? If the transaction is a dividend, what happens to Ned's basis in his stock? What is Ned's mother's basis for her stock after the redemption (i.e., is any of Ned's remaining basis transferred to his mother)? Does the corporation recognize any gain on the repurchase of the shares? What is its basis for the shares repurchased? What effect does the redemption have on Nichol Corporation's E&P