What are the requirements that must be satisfied for a distribution to qualify under § 302(b)(2) as a disproportionateredemption?
ANSWER: To qualify as a disproportionate redemption, the stock redemption must satisfy the following requirements:
(1) The shareholder’s ownership interest in the corporation after the redemption must be less than
80% of his or her ownership interest in the corporation before the redemption.
(2) After the redemption, the shareholder must own less than 50% of the total combined voting power of all classes of stock entitled to vote.
The stock attribution rules apply in determining a shareholder’s ownership interest before and afterthe redemption.