At the beginning of the current year, Sandra and Houston each own 50% of Rust Corporation. In June, Sandra sold her stock to Aaliyah for $35,000. At the beginning of the year, Rust Corporation has accumulated E & P of $50,000. Its current E & P for the year is $70,000 (prior to any distributions). Rust distributed $80,000 on March 31 ($40,000 to Sandra and $40,000 to Houston). It distributed another $80,000 on September 30 ($40,000 to Aaliyah and $40,000 to Houston). Aaliyah has taxable income as a result of the distributions from Rust of:

a. $17,500.

b. $20,000.

c. $30,000.

d. $40,000.

e. None of the above.