Mr. X owned 40% of Corporation Bs only class of stock outstanding. The remaining 60% of Bs stock was owned by Mr. Y (not related to Mr. X). Corporation B redeemed all of Xs stock for $75,000 and one-half of Ys stock for $50,000. Mr. Xs and Mr. Ys basis in their stock of Corporation B was $30,000 and $25,000, respectively. Bs earnings and profits (E&P) were $200,000. Assuming that no partial liquidation occurred, what are the amount and the character of Xs and Ys recognized gains?

Mr. X Mr. Y $45,000 capital gain $50,000 dividend

$75,000 dividend $50,000 dividend

$45,000 capital gain $25,000 dividend

$45,000 capital gain $25,000 capital gain