A$,$ an individual owns $5$ shares in M Corp and Z Corp owns $5$ shares of M Corp. There are a total of $10$ M Corp shares outstanding. Z$$s basis in M Corp shares is $$10,000.$ M Corp has E&P of $$500,000.$ M Corp wants to distribute to Z Corp a piece of Land FMV $$250,000$ and basis $$50,000.$ Z Corp wants to redeem some of its shares for the distribution of the land. Z Corp desires that this redemption qualify as a sale under the safe harbor rules of IRC $302($b$)(2).$ Z Corp wants to redeem the fewest shares possible, but still meet the safe harbor rules.

$($A$)$If Z Corp redeems $2$ shares would the safe harbor rules of IRC $302($b$)(2)$ have been met? Show your computation to prove your response.

$($B$)$What is the tax effect to Z Corp if the redemption meets the safe harbor rules under $302($b$)(2)$ and is treated as sale?

$($C$)$Why would Z Corp want capital gain treatment rather than dividend treatment?