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 stroes 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 ahs taken to heart the comment that fast food is neither. Z will distribrute the proceeds of the sale of the food stroes to C and D in pro rata redempiton. 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 not essentially equivalent to a dividend under 302(b)(4)

e None of the above.

Which is the correct answer and why?