Y corporation has 100 shares of common stock and 100 shares of nonvoting preferred stock outstanding. The preferred stock is not convertible into Y common stock and is not Section 306 stock (i.e., not stock treated specially in 306 because of its tax avoidance potential). The Y common and preferred stock are owned by the following unrelated shareholders:

Shareholder Common Preferred Shares

Shares

A 40 0

B 20 55

C 25 10

D 15 15

E 0 20

Will the following alternative redemptions qualify for exchange treatment under 302(b)?

(a) Y redeems 5 preferred shares from E.

(b) Y redeems all of its outstanding preferred stock.