C owns 60 hsare s and D wons 40 shares of Z Corporation, representing all of Z's oustanding shares. C and D are unrelated individuals. Z redeems all of C's stock. C stays on as Z's president with compensation tied to Z's profit.

a This redemption is treated as a sale or exchange under 302(b)(3)

b This redemption is divided since C ahs not completed termination in his interest in Z because of the role as president.

c None of the above

Which is the correct answer?