R, a C Corporation for 2001-10 Qualifies as an S

R, a C corporation for 2001-10 qualifies as an S corporation throughout 2011.Its net income for 2011 is $$\begin{array} { l r } \text { Dividend income } & \$ 30,000 \\\text { Gross sales } & 70,000 \\\text { Cost of goods sold } & ( 45,000 ) \\\text { Operating expenses } & ( 50,000 ) \\\text { Net income } & \$ 5,000\end{array}$$ R's AEP from 2001-10 totals $8,000.R's 2011 Federal tax liability is

A) Zero, since it is not subject to the passive investment income tax unless such income exceeds the limit for three consecutive years
B) Zero, since R is an S corporation with a net loss from its active business
C) $1,750, since the tax is assessed at 35 percent on an excess amount
D) $4,500, since a tax on passive investment income is assessed at regular corporate rates
E) Some other answer, which is $__________because_________