Seven years ago, Eleanor transferred property she had used in her sole proprietorship to Blue

Corporation for 2,000 shares of Blue Corporation in a transaction that qualified under 351.

The assets had a tax basis to her of $400,000 and a fair market value of $700,000 on the date of the transfer. In the current year, Blue Corporation (E & P of $1 million) redeems 600 shares from Eleanor for $260,000. With respect to the redemption, Eleanor will report this transaction as:

	a.	Dividends in the amount of $?.
	b.	Capital Gain in the amount of $
	c.	None of the above.