As of January 1, 2019, Mercedes Corporation (a calendar year taxpayer) had a positive balance in Accumulated Earnings and Profits (E&P) of $100,000. For the tax year of 2019, Mercedes Corporation’s Current Earnings And Profits (E&P) was a “Deficit” (negative) ($60,000). On June 30, 2019, Mercedes Corporation distributed $120,000 to its sole shareholder. The amount of the distribution that is a Taxable Dividend income to the shareholder is:

1. $40,000
2. $100,000
3. $30,000
4. $70,000