Six years ago, Mary formed Black Corporation receiving 2,000 shares of stock for $400,000. In the current year, Black Corporation (E&P of $1 million) redeems 600 shares from Mary for $360,000 in a transaction that does qualify for 317(b) stock redemption treatment. With respect to the qualifying redemption:

Group of answer choices

Black Corporation has a $300,000 reduction in E&P.

Mary has a $360,000 dividend.

Mary has a $120,000 capital gain.

Mary has a $400,000 basis in her 1,400 remaining shares.