Peter owns 100 % of XYZ Corporation. On January 1, 2020 XYZ has accumulated earnings and profits of $100,000. Current earnings and profits in 2020 were $200,000. Peter's has a basis in his XYZ shares of $150,000. On December 31, 2020 XYZ distributes $600,000 to Peter. What income or gain muat Peter recognize on his 2020 federal income tax return ?

A.

$200,000 dividend income and $250,000 capital gain

B.

$450,000 capital gain

C.

$600,000 dividend income

D.

$300,000 dividend income and $150,000 capital gain