Palmer Corporation has 1,000 shares of common stock outstanding owned by unrelated parties as follows: Jason, 300 shares; Erin, 300 shares; and Dawn, 400 shares. Each of the three shareholders paid $75 per share for the Palmer stock 10 years ago. Palmer has $800,000 of accumulated E & P and $40,000 of current E & P. In January of the current year, Palmer distributes land held as an investment (adjusted basis of $260,000, fair market value of $220,000) to Dawn in redemption of all 400 of her shares. In December of the current year, Palmer distributes securities held as an investment (adjusted basis of $90,000, fair market value of $110,000) to Erin in redemption of 200 of her shares.
(I) What are the tax results to Dawn on the redemption of her Palmer stock?
(II) What are the tax results to Erin on the redemption of her Palmer stock?
(III) What gain or loss is recognized by Palmer Corporation on the two redemptions?