(TCO 4) King Corporation has 1,000 shares of common stock outstanding owned by unrelated parties as follows: David, 300 shares; Helene, 300 shares; and Karen, 400 shares. Each of the three shareholders paid $75 per share for the King stock 10 years ago. King has $800,000 of accumulated E&P, and $40,000 of current E&P. In January of the current year, King distributes land held as an investment (adjusted basis of $260,000, fair market value of $220,000) to Karen in redemption of all 400 of her shares. In December of the current year, King distributes securities held as an investment (adjusted basis of $90,000, fair market value of $110,000) to Helene in redemption of 200 of her shares.

(I) What are the tax results to Karen on the redemption of her Palmer stock?

(II) What are the tax results to Helene on the redemption of her Palmer stock?

(III) What gain or loss is recognized by King Corporation on the two redemptions? (Points : 20)