1. X Corporation distributed $10,000 to Andy, its sole shareholder, on May 1, 2018. Andys stock basis in X Corporation, before adjusting for the 2018 distribution, was $8,000. X Corporation had accumulated E & P of $20,000 on January 1, 2018. X Corporation had a $36,000 loss as of December 31, 2018 (incurred evenly throughout the year). Based on this information, Andy will report:

   		a. Dividend income of $2,000 and $8,000 return of capital
   		b. Return of capital of $2,000 and $8,000 dividend income.
   		c. Dividend income of $5,000 and return of capital of $5,000.
   		d. Dividend income of $10,000 and capital gain of zero.
   		e. None of the above.