In 2011, Francine transferred property she had used in her sole proprietorship to Charcoal Corporation for 2,000 shares of Charcoal Corporation in a transaction that qualified under 351. At the time of formation, the assets she transferred had a tax basis to her of $400,000 and a fair market value of $700,000. In 2019, Charcoal Corporation (total E & P of $250,000) redeems 600 shares from Francine for $260,000.With respect to the redemption, which of the following is correct: