The adjusted gross estate of Katherine is $12 million. Included in the gross estate is stock in Ruby Corporation (E amp; P of $1.3 million), a...

The adjusted gross estate of Katherine is $12 million. Included in the gross estate is stock in Ruby Corporation (E & P of $1.3 million), a closely held corporation, valued at $4.6 million as of the date of Katherine's death. Katherine had acquired the stock twelve years ago at a cost of $900,000. Death taxes and funeral and administration expenses for Katherine's estate are $2.3 million. Ruby Corporation redeems one-half of the stock from Katherine's estate in a §303 redemption using property with a fair market value of $2.3 million (adjusted basis of $1.9 million). Explain the tax consequences of this redemption for Katherine's estate and for Ruby Corporation. Show all necessary calculations.