Harry Hombly owns 60 shares of Lyle Corporation's stock and 69 shares of Best Company. Harry's basis in the stock of Lyle and Best is $85,000 and $34,500, respectively. Each corporation has 100 shares of stock outstanding. Harry sells 25 shares of Best Company to Lyle Corporation for $36,000 when the E&P of each company is $20,000 and $27,000, respectively. As a result of the sale, Harry will report:

a.$23,500 capital gain

b.$36,000 dividend income

c.$20,000 dividend income

d.$27,000 dividend income