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 has a capital loss carryover of $50,000 in the current tax year. Midlands records no other capital gain transactions during the year. Assume that Trey has no capital losses and taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%.

What amount of the capital loss may Trey deduct in the current year in the following situations?
a. The $175,000 payment from Midlands Corporation is a qualifying stock redemption for tax purposes.
Trey may use $ 50,000 of the capital loss carryover to offset the gain on the redemption. His income tax liability is $......?
b. The $175,000 payment from Midlands Corporation does not qualify as a stock redemption for tax purposes.
Trey could deduct $......... ? of the $50,000 capital loss carryover. His income tax liability is $ .......??