Lesson 6A-Objectives

After completing this lesson, students should be able to:

1.	Define the term "redemption" as that term is used in connection with corporate shareholders.

2.   Determine whether a distribution to a shareholder in connection with a redemption of shares qualifies for "sale or exchange" treatment, or rather is to be treated as a dividend.  

		a.  Describe the conditions under which a redemption may qualify for "sale or exhange" treatment because it is 	"substantially disproportionate," and apply the rules to a hypothetical redemption to determine whether that 	redemption qualifies.

		b.  Describe the conditions under which a redemption may qualify for "sale or exchange" treatment because it is 	"not essentially equivalent to a dividend," and apply the rules to a hypothetical redemption to determine whether 	that redemption qualifies.

3.  Understand what is meant by "constructive ownership" of stock, and apply the construtive ownership (attribution) rules to hypothetical redemption transactions to determine whether these transactions qualify for sale treatment in light of the constructive ownership rules.