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Red Corporation is owned entirely by Alex and Betty (who are unrelated unless otherwise stated). Alex owns 60 shares of Red Corporations common stock (bought in one transaction for $600). Betty owns 40 shares of Red Corporations common stock (with an adjusted basis of $30 per share). The stocks FMV is $20 per share. Red Corporations E&P is $500. Red Corporation uses the accrual method of accounting. What are the results to the parties from the alternative transactions in each of the following situations? Provide the amount and character of shareholder income or loss and the impact on Red Corporations E&P.

1. Alex sells 10 Red Corporation shares to Betty for $200. Alternatively, what should Alex do if $50 of Reds shares have a $10 per share basis and the other 10 shares have a $20 per share basis? Are there any circumstances in which this sale could be a redemption?
2. Alex sells 30 shares back to Red Corporation for $600.
3. Alex sells 20 shares back to Red Corporation for $400.
4. What would result to Betty if Red redeems 10 of Bettys shares for $200? What is the minimum number of shares that Betty must have redeemed to ensure sale or exchange treatment?
5. Alex sells 10 shares back to Red for $200. What is instead of an individual, Alex is actually a corporation.
6. Alex sells 30 shares back to Red for $600. Shortly thereafter, Betty sells 10 shares back to Red for $200 in an exchange that had been agreed to in the preceding year. What would result to Betty? What would result to Alex if Betty sold 11 shares, rather than 10?
7. In one transaction, Alex sells 20 Red shares to Betty for $400 and 10 shares back to Red for $200.
8. Alex sells 30 shares back to Red for $600. What would result if Alex and Betty are related in the following alternative ways:
   1. Betty is Alexs brother and their father is living
   2. Betty is Alexs equal partner in a two-person partnership. What if the partnership owns an option to purchase Bettys shares in Red?
   3. Betty is a corporation in which Alex owns one half of the stock

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