The ownership of Jones, Inc. is as follows: John Jones 35 shares Marry Jones (John's wife) 10 shares 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. 

a.What is the minimum number of shares that John must surrender to qualify for sale treatment? 

b.How many shares does John own before and after the redemption? 

2. Assume Jones, Inc. distributes two parcels of land to John to facilitate the redemption. Parcel 1 has a FMV of 25,000 and a basis of $10,000 and Parcel 2 has a FMV of 15,000 and a basis of $25,000. 

a.What is the amount of gain or loss the corporation must recognize? 

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