Tom owns 100% of the stock in an Scorporation. At the beginning of the year, Tom's stock basis is $5,000. The Scorporation has E&P from its existence as a C corporation of $12,000, and its AAA balance at the beginning of the year is $1,000. During the year, the corporation reports ordinary income of $3,500, and distributes $17,500 cash to Tom. If no by-pass election is made, at the end of the year's Tom's basis in his S corporation stock is: a. $3,000. b. $500. c. $5,000. d. $4,000. e. $0