Trey is in the 28% tax bracket. He acquired 4,000 shares of stock in Midlands Corporation ten years ago at a cost of $80 per share. In the current year, Trey received a payment of $175,000 from Midlands Corporation in exchange for 1,200 of his shares in Midlands. Midlands has E & P of $160,000. Trey takes a capital loss carryover of $50,000 into the current tax year. Midlands records no other capital gain transactions during the year.

What amount of the capital loss may Trey deduct in the current year in the following situations?

a. The payment from Midlands Corporation is a qualifying stock redemption for tax purposes. Trey may use $??? of the capital loss carryover to offset the gain on the redemption.

b. The payment from Midlands does not qualify as a stock redemption for tax purposes. Trey could deduct $??? of the $50,000 capital loss carryover.