Sam's gross estate includes stock in Tern Corporation and Wren Corporation,valued at $500,000 and $650,000,respectively.Sam's adjusted gross estate equals $2,600,000.The stock represents 22% of Tern's outstanding stock and 28% of Wren's outstanding stock.Death taxes and funeral and administration expenses for Sam's estate total $500,000.Sam had a basis of $70,000 in the Tern stock and $100,000 in the Wren stock at the time of his death.None of the beneficiaries of Sam's estate own (directly or indirectly)any stock in Wren Corporation,but some of the beneficiaries own stock of Tern Corporation.Consider the following independent questions.
a.What are the tax consequences to the estate if all of its Tern stock is redeemed by Tern Corporation for $500,000?
b.What are the tax consequences to the estate if all of its Wren stock is redeemed by Wren Corporation for $650,000?

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The Answer of Sam's gross estate includes stock in Tern Corporation and Wren Corporation,valued at $500,000 and $650,000,respectively.Sam's adjusted gross estate equals $2,600,000.The stock represents 22% of Tern's outstanding stock and 28% of Wren's outstanding stock.Death taxes and funeral and administration expenses for Sam's estate total $500,000.Sam had a basis of $70,000 in the Tern stock and $100,000 in the Wren stock at the time of his death.None of the beneficiaries of Sam's estate own (directly or indirectly)any stock in Wren Corporation,but some of the beneficiaries own stock of Tern Corporation.Consider the following independent questions.
a.What are the tax consequences to the estate if all of its Tern stock is redeemed by Tern Corporation for $500,000?
b.What are the tax consequences to the estate if all of its Wren stock is redeemed by Wren Corporation for $650,000?

Sam's Gross Estate Includes Stock in Tern Corporation and Wren