Bingo Inc. makes a distribution of $ cash to its sole shareholder, Bluey Heeler, on July The corporation\'s E&P for the year was as follows:

Current E&P $

Accumulated E&P $

Bluey\'s tax basis in the corporation before the distribution was $ She has held the stock for longer than year.

a How much, if any, of the distribution is treated as a dividend?

b How much, if any, is treated as a capital gain?

c How much tax does Bluey pay on the return of capital? Assume Bluey is in the highest marginal tax bracket for this investment income.