Brighton Corporation Requires All of Its Shareholders to Relinquish a Proportionate

Brighton Corporation requires all of its shareholders to relinquish a proportionate number of their common shares,and in return they receive preferred stock.For each 10 shares of common stock,the shareholders receive 1 share of preferred.After the transaction is complete,60% of the shareholders sell their preferred stock to the remaining 40% preferred owners.Which of the following statements is correct?

A) The exchange of common for preferred is not be taxable.
B) The shareholders will recognize gain or loss when they sell their preferred stock to the other shareholders.
C) This qualifies as a "Type E" reorganization.
D) All of the above are correct.
E) None of the above is correct.