At the beginning of the current year, Chichi Corporation (a calendar year taxpayer) has accumulated E & P of $65,000. During the year, Chichi incurs a $120,000 loss from operations that accrues ratably. On May 1, Chichi distributes $40,000 in cash to Ryan, its sole shareholder. Assume Ryan has sufficient basis for the distribution. How is Ryan taxed on the distribution? When required, round your computations to the nearest dollar and use in subsequent calculations. Of the $40,000 distribution, $ is taxed as a dividend and $ represents a return of capital.