Pankee, Inc., was formed as a C corporation and made an S election five years ago. Which of the following statements correctly describes the taxability of Pankee’s distributions to its shareholders?

a. A distribution to the shareholders will be taxable to the shareholders, if it is treated as coming from the S corporation’s accumulated adjusted account and represents an amount already taxed to the shareholders.

b. A distribution to the shareholders will be nontaxable to the shareholders, if it is treated as coming from the S corporation’s accumulated adjusted account and represents an amount already taxed to the shareholders.

c. A distribution to the shareholders will be nontaxable to the shareholders, if it is treated as coming from the S corporation’s accumulated earnings and profits, earned during its years as a C corporation.

d. A distribution to the shareholders will be nontaxable to the shareholders regardless of whether it is treated as coming from the S corporation’s accumulated adjusted account or its accumulated earnings and profits.