Need Help with Retun of Capital

Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $109,750. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $164,625 to its sole shareholder, Abby, whose stock basis is $32,925. How is the distribution treated for tax purposes? If an amount is zero, enter "0". As a result the distribution Abby has the following: Dividend income: $ 109,750 Return of capital: $ 54,875 X Capital gain: $ 21,950 Stock basis after the distribution: $ Check My Work The importance of corporate distributions derives from the variety of tax treatments that may apply. From the shareholder's perspective, distributions received from the corporation may be treated as ordinary income, preferentially taxed dividend income, capital gain, or a nontaxable recovery of capital