Mr.R owns 60 of the 100 outstanding shares of B Corporation while the remaining shares are owned by unrelated parties.He also owns 80 of the 100 outstanding shares of S Corporation.During the year, R sold 40 shares of B to S for $30,000.In applying the rules governing redemptions through related corporations, the critical pre- and post-redemption ownership interests are:

Question

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The critical pre-redemption ownership interest is 60 percent (R's ownership interest in B before the sale) and the critical post-redemption ownership interest is 52 percent (R's ownership interest in B after the sale).

MrR Owns 60 of the 100 Outstanding Shares of B