67. Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:

Joe Jackson 400 Mike Jackson (Joe’s son) 200 Jane Jackson (Joe’s daughter) 200 Vinnie Price (unrelated) 200 Total shares 1,000 Thriller Corporation has current E&P of $400,000 for this year and accumulated E&P at January 1 of this year of $60,000.

During this year, the corporation made the following distributions to its shareholders:

03/31: Distributed $100 per share to each shareholder ($100,000 in total).
06/30: Distributed $100 per share to each shareholder ($100,000 in total).
09/30: Distributed $100 per share to each shareholder ($100,000 in total).
12/31: Redeemed all of Vinnie’s shares for $250,000 in cash.
Required:

a. Determine the tax status of each distribution made this year.

b. Compute the corporation’s accumulated E&P at January 1 of next year.

c. Joe is considering retirement and would like to have the corporation redeem all of his shares for $100,000 plus a 10-
year note with a fair market value of $300,000. What must Joe do or consider if he wants to ensure that the redemption will be treated as an exchange? Could Joe still act as a consultant to the company?

d. Thriller Corporation must pay attorney’s fees of $5,000 to facilitate the stock redemptions. Is this fee deductible?