X corporation has current E&P of $$5,000,000$ and accumulated E&P of $$2,000,000.$ X corporation operates two lines of business a coffeeshop with assets totaling a FMV of $$2,000,000$ and a bike rental business with assets totaling a FMV of $$4,000,000.$ X corporation has $100$ shares outstanding of a single class of stock, namely common stock. Jack and Jill, who are unrelated, own $50$ shares each. Because of an accident the coffeeshop burns down and X corporation receives insurance proceeds of $$2,000,000$ from its insurance company. It then distributes the proceeds to Jack and Jill $$1,000,000$ each in exchange for $25$ shares each. This transaction qualifies for redemption treatment as a partial liquidation because the entity has sufficiently contracted.

True or

False