Melanie and Andy, equal shareholders in Starling Corporation, receive $250,000 each in distributions on December 31 of the current year. During the current year, Starling sold an appreciated asset for 200,000 (basis of $150,000). Payment for the sale of the asset will be made as follows: 50% next year and 50% in the following year, with interest payable at a rate of 7.5%. Before considering the effect of the asset sale, Starling's current year E & P is $300,000 and it has no accumulated E & P. How much of Melanie's distribution will be taxed as a dividend?

a. $150,000.

b. $250,000.

c. $0

d. $175,000.

e. None of the choices.