Nancy is the sole shareholder of Indigo Corporation. The basis of her stock is $90,000. Indigo distributes $230,000 to Nancy in 20X8. Earnings and profits for Indigo are $60,000. What are the tax consequences of the distribution to Nancy?

Taxable Dividend Decrease in Stock Basis Capital Gain

a. $90,000 $80,000 $60,000

b. $80,000 $90,000 $60,000

C. $90,000 $60,000 $80,000

d. $60,000 $90,000 $80,000

e. None of the above