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In this video, the differences in tax implications between corporate redemptions and corporate dividend distributions are discussed. Both involve the corporation distributing funds to shareholders, but in a redemption, the shareholder returns some stock to the corporation. If a corporation repurchases stock, two outcomes for shareholders may occur. One outcome is that the transaction is treated as a sale or exchange, where the shareholder receives cash or property in return for relinquishing stock. This treatment is significant because the shareholder's basis in the stock will offset the amount realized from the transaction, affecting the overall tax consequences.