Paul now owns 500 shares of Martin Inc with a stock basis of $50,000. The total outstanding shares of Martin Inc are 1,000. Of the remaining 500 shares, 50 shares are owned by Mike (son), and the remaining 450 shares of Martin Inc are owned by an unrelated shareholder. Martin Inc has E&P of $640,000.

a. What are the tax consequences to Paul if in a stock redemption; Martin Inc redeems 100 shares from Paul for $30,000?

b. What are the tax consequences to Paul if in a stock redemption; Martin Inc redeems 400 shares from Paul for $80,000?

c. What are the tax consequences to Paul if in a complete termination of her 500 shares; Martin Inc distributes $140,000 to Paul?

d. If you were advising Paul between the scenarios listed in part a-c above, which scenario would you advise Paul to proceed with? Paul wishes to pay the least amount of tax and has $150,000 of capital loss from other investments.