At the beginning of the year, Suning Corporation (a calendar year taxpayer) has E&P of $15,000. The corporation generates no additional E&P during the year. On July 1, the corporation distributes $20,000 to its sole shareholder, Sam, whose stock basis is $4,000. Determine Sams (1) dividend income and (2) taxable gain recognized.

$20,000 and $0

$15,000 and $4,000

$15,000 and $1,000

$20,000 and $4,000