Exit Corporation has AEP of $24,000 and CEP of $20,000. During the year, the corporation makes the following distributions to its sole shareholder who has a $22,000 basis for her stock which she has held for 3 years: April 1 - $20,000; June 1 - $ 20,000; August 1; $15,000; November 1; $5,000. The treatment of the $15,000 August 1 distribution would be:

Select one:

a.

$15,000 is taxable as a dividend; $5,000 from CEP and the balance from AEP.

b.

$15,000 is taxable as a dividend from AEP.

c.

$4,000 is taxable as a dividend from AEP and $11,000 is tax-free as a return of capital.

d.

$5,000 is taxable as a dividend from CEP and $10,000 is tax-free as a return of capital.