Bee Corporation redeems all of Mr. Smiths 4,000 shares and distributes to him 2,000 shares of Vanderbuilt Corporation stock plus $50,000 cash. Mr. Smiths basis in his 20% interest in Bee Corp. is $100,000 and the stocks value is $250,000. At the time Bee Corp. is acquired by Vanderbuilt, the accumulated earnings and profits of Bee are $200,000 and of Vanderbuilt are $75,000. How does Mr. Smith treat this transaction for tax purposes? Please explain.