Colter Corporation has two shareholders: Arlen with 70 shares and Marcy with 30 shares. Colter has E&P of $100,000 and capital stock and paid-in-capital accounts totaling $200,000. Colter redeems 10 of Arlen's shares for $31,000. Arlen paid $2,000 per share for the shares 5 years ago. As a result of this transaction _____________________.

Question options:

	a. Arlen will have a long-term capital gain of $11,000.
	b. Arlen will have dividend income of $31,000.
	c. Colter's E&P will be reduced by 10% of the outstanding E&P on the distribution.