C:4-24 Price Corporation has 100 shares of common stock outstanding. Price repurchased all of Penny's 30 shares for $35,000 cash during the current year. Three years ago, Penny received the shares as a gift from her mother. Her basis in the shares is $16,000. Price has $100,000 of current and accumulated E&P. Penny's mother owns 40 of the remaining shares; unrelated individuals own the other 30 shares. What tax issues should be considered with respect to the corporation's purchase of Penny's shares?