Sam owns 65 percent of the stock of Club Corporation. Unrelated individuals own the remaining 35 percent. For a stock redemption of Sam's stock to be treated as an exchange under the "substantially disproportionate" test, what percentage of Club stock must Sam own after the redemption?

Question

Quizplus · Accepted Answer

For a redemption to be "substantially disproportionate," the shareholder must own less than 50% of the voting power after the redemption.

Sam Owns 65 Percent of the Stock of Club Corporation