Select the answer that best describes what happens when shareholders receive a series of distributions, not part of an installment obligation, covering 2 or more consecutive taxyears in redemption of all of the stock of a corporation pursuant to a plan intended to result in the complete liquidation of the corporation.

		The shareholders will be allowed to recover their respective basis in the stock before recognizing any gains.
		The shareholders will treat the distributions as dividends to the extent of the corporations earnings and profits.
		The shareholders will recognize a pro rata portion of the gain in each of the years that distributions are received.
		No losses from the transactions will be deductible.