Wolverine Corporation made a distribution of $500,000 to Jim Har Incorporated in partial liquidation of the company on December 31 of this year. Jim Har Incorporated owns 100 shares (100 percent) of Wolverine Corporation. The distribution was in exchange for 50 percent of Jim Har Incorporated's stock in the company. At the time of the distribution, the shares had a fair market value of $200 per share. Jim Har Incorporated's tax basis in the shares was $50 per share. Wolverine had total E&P of $8,000,000 at the time of the distribution.

a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Jim Har Incorporated as a result of the partial liquidation?

* Answer is complete but not entirely correct.

Dividend (correct)

$150 (Incorrect)