1.Renco Corporation distributed $10,000 to Talia, its sole shareholder, on May 1, 2022. Talias stock basis in Renco Corporation, before adjusting for the 2022 distribution, was $8,000. Renco Corporation had a deficit in accumulated E & P of $30,000 on January 1, 2022. Renco Corporation had a $5,000 profit as of December 31, 2022. Based on this information, Talia will report:

		a. Dividend income of $2,000 and $8,000 return of capital
		b. Return of capital of $2,000 and $8,000 dividend income.
		c. Dividend income of $5,000 and return of capital of $5,000.
		d. Dividend income of $10,000 and capital gain of zero.
		e. None of the above.

2.

Cane Corporation distributed $10,000 to Terry, its sole shareholder, on May 1, 2022. Terrys stock basis in Cane Corporation, before adjusting for the 2022 distribution, was $8,000. Cane Corporation had a deficit in accumulated E & P of $15,000 on January 1, 2022. Cane Corporation had a $5,000 loss as of December 31, 2022 (incurred evenly throughout the year). Based on this information, Terry will report:

		a. Dividend income of $2,000 and $8,000 return of capital
		b. Return of capital of $2,000 and $8,000 dividend income.
		c. Dividend income of $5,000 and return of capital of $5,000.
		d. Dividend income of $10,000 and capital gain of zero.
		e. None of the above.