Exit Corporation has accumulated E&P of $20,000 at the beginning of the current tax year. Current E&P is $24,000. During the year, the corporation makes the following distributions to its sole shareholder who has a $22,000 basis for her stock.

Date	Amount Distributed
April 1	$20,000
lune 1	20,000
August 1	15,000
November 1	5,000

The treatment of the $15,000 August 1 distribution would be

1. $15,000 is taxable as a dividend; $6,000 from current E&P and the balance from accumulated E&P.
2. $15₇000 is taxable as a dividend from accumulated E&P.
3. $4,000 is taxable as a dividend from accumulated E&P, and $11,000 is tax-free as a return of capital.
4. $6,000 is taxable as a dividend from current E&P, and $9,000 is tax-free as a return of capital.
5. None of the above