Among the assets in a decedent’s gross estate is stock in a closely held corpora

Question

Among the assets in a decedent’s gross estate is stock in a closely held corporation that was left to a nephew. The interest passing to the nephew is required to bear the burden of all estate taxes and expenses. The relevant facts about this estate are as follows:

Adjusted Gross estate $3,000,000

Fair market value of stock in the closely held 25,000 corporation

Administration and funeral expenses 100,000

State inheritance taxes 0

Federal estate taxes 0

What amount of closely held corporate stock may be redeemed under IRC Sec. 303 so that redemption will be treated as a sale or exchange rather than a dividend distribution?

(A) $0

(B) $70,000

(C) $130,000

(D) $200,000

Explanation / Answer

(c) $130,000

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