ABC, an S corporation, has net ordinary income from sales of its products of $5,000. During the year, ABC distributes $12,000 cash to XYZ, its sole shareholder. XYZ's in ABC stock, before the net ordinary income and cash distribution are considered, is $4,000 and ABC owes XYZ $2,000. ABC has been an S corporation since it was formed. XYZ has includable income from ABC of:

A) $5,000 ordinary income and $6,000 capital gain

B) $5,000 ordinary income and $3,000 capital gain

C) $5,000 ordinary income and $1,000 capital gain

D) $11,000 ordinary income and zero capital gain

E) $8,000 ordinary income and zero capital gain