Corporation Z is owned entirely by two individuals, C and D. C owns 60 shares of Z common stock bought in one transaction for $1,200. D owns 40 shares of Z common stock with a basis of $60 per share. The stock's fair market value is $40 per share. Z's E&P is $1,000.C sells 20 shares to Z for $800. The following statements are with regard to C.

a. The redemption will be given dividend treatment.

b. The redemption will be given sale or exchange treatment under 302(b)(2), substantially disproportionate disposition.

c. It is impossible to tell whether the transaction will be given sale or dividend treatment.

d. The redemption will most likely be treated as a sale under 302(b)(1), not essentially equivalent to a dividend, since the voting percentage has dropped to 50 percent in a two-person corporation and this is usually sufficient to meet the test.

e. None of the above.