Corporation B has been in business for 18 years. On January 1 of the current year, a fire destroyed some of the assets of the corporation, causing a cessation of part of its activities. As a result, Bs president decided on a permanent contraction of the business. On May 31 of the current year, the corporation distributed unused insurance proceeds, recovered as a result of the fire, in exchange for some of its outstanding stock. The distribution consisted of $25,000 in cash. B had earnings and profits of $50,000 prior to the distribution. This distribution will qualify as a partial liquidation.

True

False