1. The gross estate of Juanita, decedent, includes stock in Soap Corporation (E&P of $3,000,000)...
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1. The gross estate of Juanita, decedent, includes stock in Soap Corporation (E&P of $3,000,000) valued at $2,500,000. At the time of his death, Juanita owned 60% of the Soap stock outstanding, and she had an adjusted basis of $420,000 in the stock. The death taxes and funeral and administrative expenses related to Juanitas estate amount to $1,000,000 and the adjusted gross estate is $7,000,000. The remainder of the Soap stock is owned by Merry, Juanitas daughter and sole heir of her estate. What are the tax consequences to Juanitas estate if Soap Corporation distributes $2,500,000 to the estate in redemption of all of its stock in the corporation?
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