A corporation that has current earnings and profits of $150,000 distributes 75 shares of preferred stock with a fair market value of $125,000 to its sole shareholder in a nontaxable stock dividend. Prior to the distribution, the shareholder owned 250 shares of common stock with an adjusted basis of $100,000 and a fair market of $750,000. The shareholder subsequently sells the preferred stock to an unrelated party for $5000 per share. How much capital gain must the shareholder recognize as a result of the sale of the preferred stock shares?

$125,000

$375,000

$360,714

$235,714