Ling is the sole shareholder of Crimson Corporation (a C corporation). At a time when Crimson has a deficit in accumulated E & P of $132,000 and current E & P of $79,200, it distributes a cash dividend of $118,800. If Ling's basis in her stock is $13,200, what are the tax consequences of the distribution to Ling and Crimson?

If an amount is zero, enter "0".

Question: How is the $118,800 cash dividend taxed to Ling?

Dividend income

Return of capital

Capital gain