Philanthropist ("P") owns 25,000 shares of Family Corporation. The FMV of P's Family stock is $2,500,000 ($100/share); P's basis is $25,000 ($1/share). Family has 100,000 shares of common stock (its only class) outstanding; the remaining shares are owned by P's spouse and children. Family has ample accumulated E&P. The Family bylaws require all shareholders to grant the corporation rights of first refusal to buy their stock at FMV before the shares are offered for sale to an outsider, but the corporation is not required to redeem the stock. Consider the tax consequences of the following alternative plans.

(a) Family Corporation distributes $100,000 to P in redemption of 1,000 shares of stock. P then contributes $100,000 to SU.

(b) P contributes 1,000 shares of Family stock to SU. Two months later, pursuant to an oral understanding, Family distributes $100,000 to SU in redemption of its 1,000 shares. SU was not legally obligated to surrender the shares for redemption.

(c) Same as (b), above, except that P contributes 250 shares of Family stock to SU in each of the four years following his reunion. Assume that the value of the stock was $100/share throughout this period. Two months after each contribution, Family distributes $25,000 to SU in redemption of the 250 shares.