Tax Drill $-$ Section $306$

Indicate whether the following statements are "True" or "False" regarding preferred stock bailouts.

a$.$ Any ordinary income resulting is treated as a dividend for purposes of the preferential tax rate on dividend income but has no effect on the issuing corporation's E & P$.$

b$.$ No loss is recognized on the sale of the preferred stock.

c$.$ In the case of a sale of $306$ stock to a third party, the shareholder generally has capital gain income on the sale equal to the fair market value of the preferred stock on the date of the stock dividend.