Jena owns all 100 shares of Thatch Corporation stock having a $0.8million FMV. Her basis in the stock is

$300,000. Thatch's E&P balance is $500,000. Peter would like to purchase the stock but wants only the corporation's non-cash assets valued at $650,000. Peter is willing to pay $650,000 for these assets.

1. Jenna will recognize $______ of ________( select: capital gain, dividend income, return of capital) on her sale of 75 share4s of Thatch Corporation stock to Peter.

2. She will recognize an additional $______ of ______ ( select: capital gain, dividend income, return of capital) on her redemption of her remaining shares by Thatch.