A finished ACC-669 Topic 6 redemption attribution memo example, applying section 318 to a partial buyback, finding a $300,000 dividend, and recommending complete termination with the family waiver in section 302(c)(2). Searches like "acc 669 topic 6 assignment example", "acc669 topic 6 sample" and "acc-669 topic 6 example" land here.
What a finished ACC-669 Topic 6 redemption attribution memo looks like
Its fact section describes a composite family corporation with 1,000 shares of one class, 600 held by the founder and 400 by his son, who runs it. Illustrative figures put value at $1,000 a share, the founder's basis at $200 a share, and earnings and profits at $500,000, of which $450,000 is accumulated and $50,000 current. On his own shares the proposed 300-share redemption looks disproportionate: he falls from 60 percent to about 43 percent, under both 50 percent and the 48 percent that is four-fifths of his former stake. Section 318 then attributes the son's 400 shares to him, so he owns 100 percent before and after, section 302(b)(1) and (b)(2) both fail, and the $300,000 is a dividend in full. Redeeming all 600 shares for $600,000 under section 302(b)(3), with the waiver, yields $480,000 of capital gain.
How an ACC-669 Topic 6 example is structured
The memo is ordered as the founder's plan fails and a replacement is built. It opens with a share table before and after each proposal, giving direct and constructive ownership their own columns, which lets a reader watch attribution change the percentages. The first section tests the partial redemption against the substantially disproportionate rule on direct ownership, where it passes, and again after attribution, where it does not. A short paragraph applies Davis, in which the Supreme Court held that a redemption leaving a shareholder's proportionate interest unchanged after attribution is essentially equivalent to a dividend, whatever its business purpose. The earnings and profits figure then fixes how much of the $300,000 is a dividend. The second section builds the complete termination, sets out each waiver condition and checks the ten-year lookback. A comparison of the two proposals ends the memo, followed by the conditions the founder must keep.
Direct and constructive ownership side by side
The share table places the founder's direct 60 percent next to his constructive 100 percent, which is why the two readings of the same buyback disagree.
Disproportion that vanishes under attribution
Counting only his own shares, he drops to about 43 percent; counting his son's through section 318, he holds every share both before and after.
Earnings and profits fix the dividend
With $500,000 of current and accumulated earnings and profits, the whole $300,000 is a dividend, and his $60,000 basis in the redeemed shares moves to those he keeps.
Waiver conditions listed one by one
No interest except as a creditor, no seat as officer, director or employee for ten years, and a filed agreement to report any later acquisition make up the waiver.
A lookback checked before relying on it
The son bought his shares at formation, more than ten years before the redemption, so the related-party rule in section 302(c)(2)(B) does not bar the waiver.
Where marks go in ACC-669 Topic 6
Most of the credit on this memo turns on a single step, attribution. Papers that test the partial redemption on direct ownership alone find a sale where section 318 makes it a dividend, and every figure downstream inherits that error. Applying attribution but skipping the earnings and profits figure calls the $300,000 a dividend without showing the computation that bounds it. Treating the $60,000 basis of the redeemed shares as lost, instead of shifting it to his remaining stock, overstates what the founder eventually pays. A complete termination recommended without each waiver condition leaves the plan exposed the first time he rejoins the board or returns to the payroll. Business purpose offered as the reason the partial buyback survives runs directly into Davis. Memos that never set the two proposals against each other leave the recommendation undefended.
Get an ACC-669 Topic 6 example written to your instructions
Send the ACC-669 Topic 6 instructions, the rubric and the shareholder table from your case. We write a custom example to them, with ownership shown before and after attribution, each section 302 test applied in turn, earnings and profits computed wherever dividend treatment results and every waiver condition listed, back in 24 to 48 hours. The first one is free.
ACC-669 Topic 6 questions, answered
What does section 318 attribute between family members?
Stock owned by a spouse, children, grandchildren and parents is treated as owned by the individual, so a father is treated as holding his son's shares. Siblings are not on the list, and stock attributed from one family member cannot be attributed onward to another. Entities carry their own attribution rules. The memo applies only the family rule, since that is the one these facts raise.
Why does complete termination need a waiver at all?
Because attribution follows the founder out of the corporation. Even after every one of his own shares is redeemed, section 318 would treat him as owning his son's 400, and his interest would not have terminated. Section 302(c)(2) lets him waive family attribution for this purpose, provided he keeps no interest other than as a creditor, acquires none for ten years and files the required agreement.
Is sale treatment always the better result?
For an individual it usually is, because exchange treatment recovers basis and produces capital gain, while a dividend is taxed with no basis offset. A corporate shareholder can see it the other way, since a dividend may qualify for the dividends-received deduction, although provisions such as section 1059 then cut into that benefit on redemptions. The memo concerns an individual founder and says so.