Warren is the sole shareholder in the DEM S-Corporation. Warren had a stock basis of $65,000 at the beginning of the year. There was no income this year for the S-Corp and no AEP or OAA. The amount of AAA at the beginning of the year was $40,000. A distribution of $70,000 was made from surplus cash to Warren. Which is the following is correct? Warren has a basis remaining in his stock of $5,000. Warren has a taxable capital gain of $5,000. Warren has a tax-free return of capital of $70,000 from the S-Corp. Warren has taxable dividend income of $40,000.