Tammy owns 60 percent of the stock of Huron Corporation. Unrelated individuals own the remaining 40 percent. For a stock redemption of a portion of Tammy's shares to be treated as an exchange under the "substantially disproportionate" rule, the redemption must reduce Tammy's stock ownership in Huron Corporation below 48 percent.

Question

Quizplus · Accepted Answer

The "substantially disproportionate" rule requires that the shareholder's ownership be reduced below 50 percent minus one share, which in this case is 48 percent. Therefore, the statement is true.

Tammy Owns 60 Percent of the Stock of Huron Corporation