Under the Internal Revenue Code of 1954, the corporation is aseparate taxable entity, so that corporate income is taxed to thecorporation and dividends paid by the corporation are taxable to theshareholders.The framework for the taxation of corporate distributionsis provided by Sections 301 (a), 301 (c), and 316 of the Code.Both Arnold and Acorn Corporation have a basis in their stock of ,000.Perch Corporation discontinues the paint brush operation and distributes assets worth ,000 each to Arnold and Acorn Corporation in redemption of 20% of their stock.A) If a stock redemption is made by an estate following the decedent's death, the redemption may receive capital gains treatment only if the money is actually used to pay the death taxes.B) Attribution rules do not apply to qualified Sec. C) The value of decedent's stock satisfies the Sec.
For the redemption to be treated as a sale, which one of the following conditions must be met?
A) Buddy cannot be a creditor of the corporation after the redemption.
B) Buddy cannot be an officer of the corporation after the redemption.
B) To qualify as a partial liquidation, a distribution must result in a bona fide contraction of the corporate business at the corporate level.
C) A partial liquidation of a corporation must be pro rata. 56) Blast Corporation manufactures purses and make-up kits.Perch Corporation is owned equally by Arnold, an individual, and Acorn Corporation.