Owen Corp. has 2,000 shares of common stock outstanding. Cindy owns 800 of these shares and Mike owns 1,200. Mike's total basis in his 1,200 shares is $80,000. Owen has $1,000,000 of accumulated E&P as of the beginning of the year, and is profitable this year. Assume that Owen redeems 420 shares of Mike's stock during the year for $160,000. Mike seeks to determine if the redemption qualifies for sale treatment as a disproportionate redemption under Section 302(b)(2). Would Mike pass the 50% test under Section 302(b)(2)?

a. yes.

b. no.

Owen Corp. has 2,000 shares of common stock outstanding. Cindy owns 800 of these shares and Mikelowns 1,200. Mike's total basis in his 1,200 shares is $80,000. Owen has $1,000,000 of accumulated E&P as of the beginning of the year, and is profitable this year. Assume that Owen redeems 420 shares of Mike's stock during the year for $160,000. Mike seeks to determine if the redemption qualifies for sale treatment as a disproportionate redemption under Section 302(b)(2). Would Mike pass the 80% test under Section 302(b)(2)?

a. yes.

b. no.