Abel owns all the stock of both Beige Corporation and Brown Corporation.Both corporations have significant amounts of E & P.Abel sells some of his stock in Beige to Brown Corporation.Since the transaction was not a stock redemption by Beige,Abel has avoided the qualifying stock redemption provisions.

Question

Quizplus · Accepted Answer

If an individual has at least a 50% ownership interest in two corporations and transfers stock in one corporation to the other for money or property,the exchange is treated as a redemption of the stock of the acquiring corporation.The redemption is tested under § 302 for sale or exchange treatment or dividend treatment.

Abel Owns All the Stock of Both Beige Corporation and Brown