Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow has accumulated E & P of $297,800. The corporation incurs a deficit in current E & P of $416,920 that accrues ratably throughout the year. On June 30, Sparrow distributes $178,680 to its sole shareholder, Libby. If Libby's stock has a basis of $29,780, how is she taxed on the distribution? Taxable dividend income in the amount of $fill in the blank 1. Return of capital in the amount of $fill in the blank 2. Capital gains in the amount of $fill in the blank 3. Feedback Area