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Orange, Inc. distributes $40,000 to its shareholders when its current E&P is $10,000 and its accumulated E&P (not including the current E&P) is $15,000. Julius,

Orange, Inc. distributes $40,000 to its shareholders when its current E&P is $10,000 and its accumulated E&P (not including the current E&P) is $15,000. Julius, a 20% shareholder, has basis in Orange stock of $1,000. How is Julius' distribution treated for tax purposes?

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