Stock redemption is generally treated as an exchange, in which the stockholders give up their stock in exchange for cash or property. However, the Internal Revenue Code (IRC) does provide objective/mechanical tests that help distinguish when a redemption should be treated as an exchange (sale) or a dividend. Which of the following statements is true regarding the desired treatment of stock redemptions?

		Corporate shareholders prefer exchange/sale treatment in order to receive the dividend received deduction. Individual shareholders prefer dividend treatment in order to receive the preferential rates for qualified dividends.
		Both prefer dividend treatment of stock redemption to avoid recognizing a gain.
		Corporate shareholders prefer dividend treatment in order to receive the dividend received deduction. Individual shareholders prefer exchange/sale treatment in order to reduce the amount by their basis as a recovery of cost.