Seven years ago, Ellen transferred property she had used in her sole proprietorship to Bridge Corporation for 2,000 shares of Bridge 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, Bridge Corporation (E & P of $1 million) redeems 600 shares from Ellen for $260,000 in a transaction that does not qualify for sale or exchange treatment. With respect to the redemption, Ellen will have (Please show your analysis.)

a.	$140,000 dividend.
b.	$260,000 dividend.
c.	$140,000 capital gain.
d.	$260,000 capital gain.
e.	None of the above.

8. On January 1, Coockies R Us Corporation (a calendar year taxpayer) has accumulated E & P of $60,000. During the year, Coockie incurs a net loss of $100,000 from operations that accrues ratably. On June 30, Coockie distributes $25,000 to Mrs Baker, its sole shareholder. How much of the $25,000 represents ordinary dividend income to Mrs. Baker? (Please show your calculations.)

a. $0.

b. $5,000.

c. $10,000.

d. $25,000.

e. None of the above