What are the tax consequences to teal corporation

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Question - Teal Corporation, with E & P of $1.9 million, distributes property with a basis of $180,000 and a fair market value of $250,000 to Grace, a 28% shareholder.

a. What are the tax consequences to Teal Corporation and to Grace if the distribution is a property dividend?

b. What are the tax consequences in (a) if Grace is a corporation?

c. What are the tax consequences to Teal Corporation and to Grace if the distribution is a qualifying stock redemption? Assume that half of Grace's stock (basis of $70,000) is redeemed in the transaction.

d. What are the tax consequences in (c) if Grace is a corporation?

e. If the parties involved could choose from among the preceding options, which would they choose and why?

Reference no: EM131826234

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