Red Corporation is owned entirely by Alex and Betty (who are unrelated unless otherwise stated). Alex owns 60 shares of Red Corporation's common stock (bought in one transaction for $600). Betty owns 40 shares of Red Corporation's common stock (with an adjusted basis of $30 per share). The stock's FMV is $20 per share. Red Corporation's E&P is $500.Red Corporation uses the accrual method of accounting. What are the results to the parties from the alternative transactions in each of the following situations? Provide the amount and character of shareholder income or loss and the impact on Red Corporation's E&P.

a.Alex sells 10 Red Corporation shares to Betty for $200. Alternatively, what should Alex do if $50 of Red's shares have a $10 per share basis and the other 10 shares have a $20 per share basis. Are there any circumstances in which this sale could be a redemption?