Hogg Corporation distributes $30,000 to its sole shareholder, Ima. At the time of the distribution, Hogg's E&P is $14,000 and Ima's basis in her stock is $10,000. Ima's gain from this transaction is a

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The distribution includes $14,000 of E&P, which is tax-free. However, the remaining $16,000 ($30,000 - $14,000) is treated as a nontaxable return of capital to the extent of Ima's basis ($10,000). The remaining $6,000 ($16,000 - $10,000) is a capital gain to Ima.

Hogg Corporation Distributes $30,000 to Its Sole Shareholder, Ima