A Corporation Is Owned 70% by Jones and 30% by Smith.Jones

A corporation is owned 70% by Jones and 30% by Smith.Jones owns 70 shares with a cost of $100 each.Smith owns 30 shares with a cost of $100 per share.The company redeems 5 shares from Smith at a redemption price of $400 per share.No stock is redeemed from Jones.This is not a redemption to pay death taxes,and it is not a partial liquidation.What is the tax impact on Smith?

A) $2,000 dividend
B) $2,000 capital gain
C) $1,500 dividend
D) $1,500 capital gain