Patrick and Mahomes are the only two shareholders in Chiefs Corp. Patrick owns 60 shares with a basis of $3,000, and Mahomes owns the remaining 40 shares with a basis of $12,000. At year end, Chiefs is considering different alternatives for redeeming some shares of stock. Evaluate whether each of these stock redemption transactions qualify for sale or exchange treatment. Explicitly state your conclusion and your rationale.

Part I: Chiefs redeems 10 of Patricks shares for $2,000. Chiefs has $20,000 of E&P at year end and Patrick is unrelated to Mahomes.

Sale/Exchange Treatment: (Answer Yes or No)

Rationale:

Part II: Chiefs redeems 25 of Patricks shares for $4,000. Chiefs has $20,000 of E&P at year end and Patrick is unrelated to Mahomes. Sale/Exchange Treatment: (Answer Yes or No)

Rationale:

Rationale: Part III: Chiefs redeems 10 of Mahomes shares for $2,500. Chiefs has $20,000 of E&P at year end and Mahomes is unrelated to Patrick.

Sale/Exchange Treatment: (Answer Yes or No)

Rationale:

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