LO.1, 7 Assume in Problem 26 that Julio has a capital loss carryover of $110,000 in the current tax year. Julio has no other capital gain transactions during the year. What amount of the capital loss may Julio deduct in the current year in the following situations?

a. The $500,000 payment from Gray Corporation is a qualifying stock redemption for tax purposes (i.e., receives sale or exchange treatment).

b. The $500,000 payment from Gray Corporation does not qualify as a stock redemption for tax purposes (i.e., does not receive sale or exchange treatment).

c. If Julio had the flexibility to structure the transaction as described in either

(a) or (b), which form would he choose?