In June of the current year, Marigold Corporation declares a $4 dividend out of E & P on each share of common stock to shareholders of record on August 1. Ellen and Tim each purchase 100 shares of Marigold stock on July 1. On July 15, Ellen makes a short sale of 20 shares of Marigold stock. Tim sells 50 of his shares on August 10 and continues to hold the remaining 50 shares through the end of the year. Ellen closes her short position in Marigold on October 15. With respect to the dividends, which of the following is correct?

a. Ellen will have $400 of qualifying dividends subject to reduced tax rates and $400 of ordinary income (from dividends paid on the short position of Marigold stock).

b. Tim will have $200 of qualifying dividends subject to reduced tax rates and $200 of ordinary income.

c. All $400 of Ellens dividends will qualify for reduced tax rates.

d. All $400 of Tims dividends will qualify for reduced tax rates.

e. All dividends will be taxed at ordinary income tax rates.