Longhorn Company reports current E&P of $185,000 in 20X3 and a deficit of ($370,000) in accumulated E&P at the beginning of the year. Longhorn distributed $555,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorn is $185,000. How is the distribution treated by the shareholder in 203? Multiple Choice $555,000 dividend. $185,000 dividend, $185,000 tax-free return of basis, and $185,000 capital gain. () $185,000 dividend and $370,000 tax-free return of basis. $0 dividend, $185,000 tax-free return of basis, and $370,000 capital gain