Sandi

owns all 100 shares of

Bonsai

Corporation stock having a

$0.95

million FMV. Her basis in the stock is

$600,000.

Bonsai's

E&P balance is

$350,000.

Tom

would like to purchase the stock but wants only the corporation's non-cash assets valued at

$750,000.

Tom

is willing to pay

$750,000

for these assets.Read the requirements

LOADING...

.

Requirement a. What are the tax consequences to

Sandi,

Tom,

and

Bonsai

if

Tom

purchases 75 shares of

Bonsai

stock for

$750,000

and

Bonsai

redeems

Sandi's

remaining 25 shares for

$200,000

cash?

Sandi will recognize		of				on her sale of 75 shares of Bonsai Corporation stock to Tom.
She will recognize an additional				of			on the redemption of her remaining shares by Bonsai.