Candy Corp. is a C Corporation that began operations in Year 1. Candy Corp.'s Year 1 through Year 3 taxable earnings and profits are as follows:
| Year |
E&P |
| 1 |
(25,000) |
| 2 |
5,000 |
| 3 |
10,000 |
|
On the last day of Year 3 Candy Corp. makes a $12,500 cash shareholder distribution, distributed equally among its two shareholders, Goode and Plenteau. How much of Goode's distribution is a nontaxable return of capital? Assume sufficient basis in Goode's stock investment.