Identify which of the following statements is true.
A)Only stock included in the decedent's gross estate can be redeemed under the Sec. 303 provisions.
B)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.
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.
D)All of the above are true.

Question

Quizplus · Accepted Answer

A) Only stock included in the decedent's gross estate can be redeemed under the Sec. 303 provisions. This is true as Sec. 303 only applies to stock that is included in the decedent's gross estate for estate tax purposes.
B) 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 also true as Sec. 303 allows the redemption of stock to pay for certain expenses, and if done properly, can result in capital gains treatment for the shareholder.
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 is also true as the redemption price is often calculated to satisfy the estate tax liability, and thus may not result in a substantial gain for the shareholder.

Identify Which of the Following Statements Is True