Nonqualified redemption: Corp. redeems shares from SH & transaction is treated as dividend distribution. (to extent of E&P & is taxable). SH still maintains ownership interest. Remaining basis of redeemed shares (if any) is added to basis of remaining shares.

On Dec. 31 of the current year, Blue Corp. distributed $10,927 cash to Julia in redemption of some of her shares of Blue Corp. stock. Julias basis in her redeemed shares was $8,465. Blue Corp. had no accumulated E&P, and current E&P for all of the current year is $96,346. Blue Corp. made no additional distributions in the current year. After the redemption, Julia still owns 10 shares of Blue Corp., which had a basis of $4,000 (total, not per share) prior to the redemption. If the redemption is a nonqualified redemption, what amount of dividend income does Julia recognize?