The Adjusted Gross Estate of Keith, Decedent, Is $24 Million

The adjusted gross estate of Keith, decedent, is $24 million. Included in the gross estate is stock in Gold Corporation (E & P of $2.6 million) , a closely held corporation, valued at $9.2 million as of the date of Keith's death. Keith had acquired the stock 12 years ago at a cost of $1.8 million. Death taxes and funeral and administration expenses for Keith's estate are $4.6 million. Gold Corporation redeems one-half of the stock from Keith's estate in a § 303 redemption to pay death taxes using property with a fair market value of $4.6 million (adjusted basis of $3.8 million) . Which of the following is a correct statement regarding the tax consequences of this redemption?

A) The estate will have a basis of $4.6 million in the property received from Gold Corporation in redemption of the estate's stock.
B) Gold Corporation will not reduce its E & P as a result of the distribution of the property to Keith's estate.
C) The estate will recognize a $2.8 million long-term capital gain on the redemption.
D) Gold Corporation recognizes no gain (or loss) on the distribution of the property to Keith's estate.
E) None of these.