Husker Corporation Reports Current E&P of Negative $200,000 in Year

Multiple Choice

Husker Corporation reports current E&P of negative $200,000 in year 1 and accumulated E&P at the beginning of the year of $300,000.Husker distributed $200,000 to its sole shareholder on December 31, year 1.The shareholder's tax basis in her stock in Husker is $50,000.How is the distribution treated by the shareholder in year 1?

A) $200,000 dividend.
B) $100,000 dividend, $50,000 nontaxable return of basis, and $50,000 capital gain.
C) $100,000 dividend and $100,000 nontaxable return of basis.
D) $0 dividend, $50,000 nontaxable return of basis, and $150,000 capital gain.