Tesa is in the HIGHEST regular tax bracket. She acquired 500 shares of stock in Swan Corporation seven years ago for $100 a share. In the current year, Swan Corporation (E & P of $1.2 million) redeems all of her shares for $160,000. What are the income tax consequences to Tesa if:

a. The redemption qualifies for sale or exchange treatment, and Tesa has no other transactions in the current year involving capital assets?

b. The redemption does not qualify for sale or exchange treatment, because the IRS determines that this distribution is essentially equivalent to a dividend?