What are the tax issues for Donna

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Problem - Donna and Steven own all the stock in Pink Corporation (E & P of $2,000,000). Each owns 1,000 shares and has a basis of $75,000 in the shares. Donna and Steven are married and have two minor children. Pink Corporation has had considerable earnings in the past few years and has substantial cash flow. Pink pays Donna an annual salary of $250,000. Steven is currently unemployed. Donna and Steven own a house worth $600,000 with an adjusted basis of $450,000. The couple decides to divorce in the current year. They want to sell their residence and each purchase a new home. Donna wants to acquire Steven's stock in Pink Corporation but does not have adequate cash to buy his one-half interest. What are the tax issues for Donna, Steven, and Pink Corporation?

Reference no: EM132646659

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