For Many Years, Howdy and His Son, Doody, Owned and Operated

For many years, Howdy and his son, Doody, owned and operated Buffalo Corporation.Howdy owned 1,000 shares of the corporation while the remaining 400 shares outstanding were owned by Doody.Howdy had a basis in the stock before he died of $20,000.On June 1 of this year, Howdy died.Howdy's gross estate of $1,500,000 was comprised of various assets, including stock in Buffalo.Deductions for funeral and administrative expenses were $10,000 and Federal and state death taxes were $200,000.Of the remainder, $100,000 was left as a charitable contribution to the United Way and the balance, including the stock, was transferred to Howdy's sole heir, Doody.In order to pay off the death taxes and other expenses, Howdy's estate sold some of the stock back to the corporation.If the corporation distributed property in exchange for the estate's shares:

A) Any increase or decrease in value on property used to redeem the stock would escape tax because the property got a step-up or step-down in basis at death.
B) Under current law, the corporation would recognize no gain or loss on the distribution based on the General Utilities doctrine.
C) The corporation must recognize gain and loss on the distribution of property in a redemption that meets the requirements of § 303 relating to redemptions to pay death taxes.
D) The corporation must recognize gain, but not loss, on the distribution.
E) More than one of the above are true.