The ownership of Coal Corp. is as follows:

A: 40 shares

B, As wife: 10 shares

Z Corp.: 20 shares

D, As brother: 30 shares

• As son owns 50% of Z Corp.
• Coal Corp. has $100,000 of accumulated and current E&P in 2020.

Explain the consequences to Coal Corp. and the redeemed shareholder of each transaction described below. Assume each transaction is mutually exclusive; i.e., they are independent of one another so that in each transaction, it is the only transaction that happens during the year.

Questions:

a) Coal Corp. redeems 20 shares from A for $30,000.

b) Coal Corp. redeems all of Z Corp.s shares for $15,000.

c) X Co. redeems 20 shares from D.