Scarlet Witch, The Vision, and Peter Parker, unrelated individuals, own all of the stock in New Avengers Corporation (E & P of $800,000) as follows: Scarlet Witch, 500 shares; Vision, 150 shares; and Peter, 100 shares. New Avengers redeems 225 of Scarlet Witchs shares (basis of $100,000) for $325,000.

a. Will this transaction qualify as a redemption of stock?

b. What amount of gain will Scarlet Witch realize and recognize and what will be the character of the gain?