Sam's gross estate includes stock in Tern Corporation and Wren Corporation, valued at $1.4 million and $980,000, respectively. At the time of Sam's death, the stock represented 22% of Tern's outstanding stock and 27% of Wren's outstanding stock. Sam's adjusted gross estate equals $6,500,000. Death taxes and funeral and administration expenses for Sam's estate total $980,000. Sam had a basis of $350,000 in the Tern stock and $190,000 in the Wren stock at the time of his death. None of the beneficiaries of Sam's estate own (directly or indirectly) any stock in Tern Corporation, but some of the beneficiaries own stock of Wren Corporation. Consider the following independent questions.
a. What are the tax consequences to the estate if all of its Wren stock is redeemed by Wren Corporation for $980,000?
b. What are the tax consequences to the estate if all of its Tern stock is redeemed by Tern Corporation for $1.4 million?

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The Answer of Sam's gross estate includes stock in Tern Corporation and Wren Corporation, valued at $1.4 million and $980,000, respectively. At the time of Sam's death, the stock represented 22% of Tern's outstanding stock and 27% of Wren's outstanding stock. Sam's adjusted gross estate equals $6,500,000. Death taxes and funeral and administration expenses for Sam's estate total $980,000. Sam had a basis of $350,000 in the Tern stock and $190,000 in the Wren stock at the time of his death. None of the beneficiaries of Sam's estate own (directly or indirectly) any stock in Tern Corporation, but some of the beneficiaries own stock of Wren Corporation. Consider the following independent questions.
a. What are the tax consequences to the estate if all of its Wren stock is redeemed by Wren Corporation for $980,000?
b. What are the tax consequences to the estate if all of its Tern stock is redeemed by Tern Corporation for $1.4 million?

Sam's Gross Estate Includes Stock in Tern Corporation and Wren