Question
The outstanding stock of Bluebird, Inc. is owned by the following shareholders: Shares Owned Greg Stanton 500 shares Julie Stanton 500 shares Sarah Johnson 250
The outstanding stock of Bluebird, Inc. is owned by the following shareholders:
Shares Owned
Greg Stanton 500 shares
Julie Stanton 500 shares
Sarah Johnson 250 shares
Conner Young 250 shares
Total shares outstanding 1,500 shares
Greg and Julie are husband and wife. Sarah is Greg's sister. Connor is unrelated to Gregl. In July, Bluebird, Inc. redeemed 300 of Greg's shares for $900,000. Determine whether the transaction will be considered a redemption or a dividend. Include in your answer a summary of the redemption rules and why you concluded whether the transaction in the above example did or did not qualify for redemption treatment.
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