Dionne corporation has one hundred shares of stock outstanding. It redeems forty shares of stock for $200,000 at a time when its earning and profits are $200,000. What would be the reduction in the earnings and profits of dionee corporation as a result of this redemption? Assume that the redemption qualifies as a stock redemption under section 302(b)

$200,000

$20,000

$80,000

$100,000