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 loss of $30,000 during the period January 1 June 30, but total year profits as of December 31, 2018 were $5,000. Based on this information, Andy will report:

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