A stock redemption to pay death taxes under Sec. 303 is generally treated as

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A Sec. 303 redemption is treated as a sale or exchange of property for tax purposes. This means that the shareholder may recognize capital gains or losses on the redemption, depending on the price paid by the corporation for the stock. The purpose of the Sec. 303 redemption is to enable the decedent's estate to pay estate taxes using corporate funds, without forcing the shareholders to recognize substantial taxable gains.

A Stock Redemption to Pay Death Taxes Under Sec