The ownership of Jones, Inc. is as follows:

John Jones 35 shares owned

Marry Jones (John's wife) 10 shares owned

Jessie Brown (John's daughter) 5 shares

George Brown (John's son) 5 shares

Alicia Brown (Jessie and George's daughter) 5 shares

J&B partnership 20 shares (John owns 25%)

Jonesport, Inc. 20 shares(John owns 20%)

Total shares 100

All individual shareholders work actively in the business

1. On July 1st John decided to curb his involvement in Jones, Inc. What is the minimum numberof shares that John must surrender to qualify for sale treatment? How many shares does John own beforeand after the redemption?

2. Assume Jones, Inc. distributes two parcels of land to John to facilitate the redemption. Parcel 1 has aFMV of 25,000 and a basis of $10,000 and Parcel 2 has a FMV of 15,000 and a basis of $25,000. What is theamount of gain or loss the corporation must recognize?

3. In an independent circumstance, assume that John redeems 15 shares of stock for $45,000 and theredemption qualifies for sale treatment. What is the effect of the redemption distribution onJones's E & P?