Tammy owns 60 percent of the stock of Huron Corporation. Unrelated individuals own the remaining 40 percent. For a stock redemption 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

Tammy's stock ownership must be reduced below 50 percent and be less than 80 percent of her existing ownership (80% × 60% = 48%).

Tammy Owns 60 Percent of the Stock of Huron Corporation