Cobblepot and Nygma founded the Iceberg Lounge, Inc. as equal shareholders (Nygma is the lounge act). At the end of the year, each receives a cash distribution of $500,000. Icebergs current year taxable income is $1 million and it has no accumulated E& P. (Riddler's act isn't very good). Two years ago, Iceberg sold air conditioning equipment to Mr. Freeze for $1,200,000 (basis of $400,000). Payment for one-half of the sale of the asset was made last year, the balance this year--in cold cash. How much of Nygmas distribution will be taxed as a dividend?

a.	$0
b.	$300,000
c.	$500,000
d.	$600,000
e.	None of the above