Which of the Following Is an Incorrect Statement Regarding the Tax

Which of the following is an incorrect statement regarding the tax consequences of a § 306 stock disposition?

A) In a sale of § 306 stock, the shareholder generally recognizes ordinary income equal to the fair market value of the preferred stock on the date it was acquired in the stock dividend.
B) No loss is recognized on a sale of § 306 stock.
C) The issuing corporation's E & P is not reduced by a sale of § 306 stock.
D) In a redemption of § 306 stock, the shareholder generally recognizes dividend income equal to the amount of the redemption proceeds.
E) None of the above.