The gross estate of Raul, decedent, includes stock in Iris Corporation (E & P of $8,000,000)...

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The gross estate of Raul, decedent, includes stock in IrisCorporation (E & P of $8,000,000) valued at $6,000,000. At thetime of his death, Raul owned 60% of the Iris stock outstanding andhe had a basis of $840,000 in the stock. The death taxes andfuneral and administration expenses related to Raul’s estate amountto $2,000,000, and the adjusted gross estate is $16,000,000. Theremainder of the Iris stock is owned by Monica, Raul’s daughter andsole heir of his estate. What are the tax consequences to Raul’sestate if Iris Corporation distributes $6,000,000 to the estate inredemption of all of its stock in the corporation

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A redemption to pay death taxes under Section 303 applies to the extent of the sum of the death taxes and funeral and administration expenses or 2000000 The estates basis in the shares redeemed under See Answer

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