Sheri owns 800 of the 1,500 outstanding shares of Carney Corporation, which she bought a number of years ago for $20 each. She needs money for her daughter’s tuition but does not want to sell all of her shares in the corporation. Carney has

$200,000 in earnings and profits.

a. What are the tax consequences if the corporation buys 150 of her shares for

$15,000?

b. What are the tax consequences if the corporation buys 300 of her shares for

$30,000?

c. If Sheri’s father owns the other 700 shares of the corporation, what are the tax consequences of each of the sales?

AppendixLO1