In the middle of the current year, Grange Corp. distributed $60,000 to its sole shareholder, Greg. Gregs stock basis was $100,000 prior to the distribution.

Grange Corp.s current E&P is $20,000 on the date of distribution and $40,000 for the entire year. Grange Corp. has a deficit in accumulated E&P of $100,000.

What amount of the distribution receives dividend treatment?

Answer is 40,000 but don't understand how to get ti