Carlys gross estate includes 1,500 shares of stock of Macon Corporation (basis to Carly of $1,200,000, fair market value on date of death of $8,250,000). The estate will incur $5,500,000 in death taxes and funeral and administration expenses, and the adjusted gross estate is $22,000,000. Joni, Carlys daughter and sole heir of her estate, owns the remaining 500 shares of Macon Corporations shares outstanding. In the current year, Macon (E&P of $10,000,000) redeems all the estates 1,500 shares for $8,250,000.

1. Can the rest of the proceeds be treated as received from the sale of stock under one of the other qualifying redemptions (not essentially equivalent to a dividend, substantially disproportionate, or complete termination)? Explain why or why not and show computations to support your answer.
2. Without prejudice to your answer in Part (1), assume that the rest of the proceeds cannot be treated as a sale of the stock under one of the other qualifying redemptions. What are the amounts and character of the income the estate must recognize?