An S corporation has an accumulated adjustments account of $30,000 at the beginning of the year and accumulated earnings and profits of $10,000. The corporation earns $20,000 for the year.

Melvin, a 30 percent owner who paid $8,000 for his stock, receives $17,000 from the corporation. What is the amount of dividend income he must report?

a. $10,000

b. $2.000

c. $3,000

d. $0

e. None of the above