Life · Chapter 10 · Business Continuation
Stock Redemption & §303 Plans
Definition
An entity plan for a closely held corporation: the corporation buys a policy on each stockholder and is obligated to redeem (purchase) the deceased stockholder's shares at a prearranged price. A §303 redemption eases estate-tax liquidity when the value of the stock exceeds 35% of the deceased's adjusted gross estate (gross estate minus §2053/§2054 deductions).
Exam tip
Unlike a partnership, a corporation survives an owner's death — the agreement protects the FAMILY's liquidity and the survivors' control, not the company's legal existence.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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