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Problem $18-57($LO $18-4)($Static$)$

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Boots, Incorporated is owned equally by Muhammad and his daughter Isabel, each of whom holds $1,000$ shares in the company. Muhammad wants to retire from the company, and it was decided that the company will redeem all $1,000$ of Muhammad's shares for $$25,000$ per share on December $31$ of this year. Muhammad's tax basis in each share is $$500.$ Boots, Incorporated has current E&P of $$1,000,000,$ and accumulated E&P was $$5,000,000$ at the beginning of the year.

Problem $18-57$ Part b $($Static$)$

b$.$ If Muhammad remained as the chair of the board after the redemption, what are the amount and character of income $($capital gain or dividend$)$ that Muhammad will recognize this year?