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Frank and Fred are owners of F Corp. Frank owns 800 shares with a basis of $8,000 and Fred
owns 200 shares with a basis of $2,000. Frank has the corporation buy back 100 of his shares @
$120 per share, planning on reporting a $2,000 long-term capital gain on his 1040.
As Frank's tax advisor, what would you tell him about how the IRS might view this arraignment?

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