Identify which of the following statements is true.

Question

Quizplus · Accepted Answer

A) If the stock redemption proceeds are used to pay either the estate's funeral and administrative expenses or death taxes, the redemption can qualify for capital gains treatment under Sec. 303.
This is true. Under Sec. 303, stock redemptions to pay for funeral and administrative expenses or death taxes can be treated as capital gains, which may result in a lower tax liability.

B) Only stock included in the decedent's gross estate can be redeemed under the Sec. 303 provisions.
This statement is true. To qualify for Sec. 303 treatment, the redeemed stock must be included in the decedent's gross estate for estate tax purposes.

C) Usually, a stock redemption qualifying under Sec. 303 as a redemption to pay death taxes will result in little or no gain to the redeeming shareholder.
This statement is also true. When a shareholder is redeeming stock to pay death taxes under Sec. 303, the amount of gain recognized is limited to the amount of death taxes paid. Therefore, the shareholder may only recognize little or no gain.

Therefore, all of the above statements are true.

Identify Which of the Following Statements Is True