Z is a corporation in the fast food business and the shoe business and has two individual shareholders, C and D. Z's slogan is, "Take Care of Your Feet While You Eat." Z owns 10 fast food stores which are adjacent to 10 shoe stores that it owns. This arrangement has continued for at least 10 years. Z proposes to sell the fast food stores since one of his executives has taken to heart the comment that fast food is neither. Z will distribute the proceeds of the sale of the food stores to C and D in a pro rata redemption. Z will over time convert its shoe inventory to upscale footwear made in Italy and Brazil.

a. The pro rata distribution is a dividend to C and D.

b. The pro rata distribution is a dividend to C and D since they did not surrender any shares for redemption.

c. The pro rata distribution is not essentially equivalent to a dividend under 302(b)(1).

d. The pro rata distribution is essentially equivalent to a dividend under 302(b)(4).

e.None of the above.