purr cat food has earnings and profits of 50,000 and acquires wag dog food inc. in a statutory merger. wag has earnings and profits of 40,000. Soo after the merger, Purr distributes 60,000 to its sharesholders, old and new. The amount of the distribution taxable as a dividend is:

A. 40,000

B. 50,000

C. 60,000

D the old shareholders in Wag have dividends up to 40,000 but the "old Purr shareholders have none.