Bruce Wayne, the sole owner of Batarang, Inc., a manufacturer of super hero gimmicks, received a non-taxable preferred stock dividend in 2005. After distribution, he held 1,000 shares of the common (FMV: $1,000 per share (basis: $10 per share) and 100 shares of preferred, FMV: $100 per share). Batarang had $5,000 E&P. In 2010 he gave the preferred to his son, Damien. In 2016, Batarang redeems all of the stock from Damien for $15,000. E&P at the time of redemption was $25,000. With respect to the stock redemption:

	a.	Damien will recognize a capital gain of $14,090.
	b.	Damien will recognize a dividend of $5,000 and capital gain of $9,090.
	c.	Damien will recognize a dividend of $10,000 and capital gain of $4,090..
	d.	Damien will recognize dividend income of $15,000.
	e.	None of the above.