Question: Alice, Bob, Carol, the ABC Partnership, Franklin
Alice, Bob, Carol, the ABC Partnership, Franklin Corporation, and the Gleason Family Trust own shares of Holston Corporation’s single class of stock as follows: 
The Holston shareholders have owned their shares for more than one year. The partners of the ABC Partnership have the following interests in the partnership: Alice 40%, Bob 30%, and Carol 30%. The shareholders of Franklin Corporation own shares as follows: Alice 10%, Bob 60%, and Carol 30%. The equal beneficiaries of the Gleason Family Trust are David (Alice’s grandson) and Edgar (Bob’s grandson). Alice is considering having Holston redeem some of her Holston shares in exchange for cash. On the day of the planned redemption, Holston will have $25,000 of current E&P and $75,000 of prior accumulated E&P. Determine the tax consequences of the following two independent transactions to Alice and Holston Corporation. a. Holston redeems 100 shares of its stock from Alice in exchange for $80,000. b. Holston redeems 200 shares of its stock from Alice in exchange for $160,000.
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Shareholder Shares Held Adjusted Basis Alice Bob (Alice's brother) Carol (Alice's daughter) ABC Partnership Franklin Corporation Gleason Family Trust $ 75,000 125,000 25,000 50,000 150,000 75,000 300 500 100 200 600 300 Total 2,000
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