Daisy Corporation is the sole shareholder of Ostrich Corporation, which it hopes to sell within the next three years.

Daisy Corporation is the sole shareholder of Ostrich Corporation, which it hopes to sell within the next threeyears. The Ostrich stock (basis of $25 million) is currently worth $30 million, but Daisy believes that it wouldbe easier to find a buyer if it was worth less. To lower the value of its stock, Ostrich distributes $4 millioncash to Daisy (sufficient E & P exists to cover the distribution). At a later date, Daisy sells Ostrich for $26million.a. What are the tax consequences to Daisy on the sale?