HIJ Corporation Had a Balance of $100,000 in Accumulated Earnings

HIJ Corporation had a balance of $100,000 in accumulated earnings and profits at the beginning of the year.During the current year it had a deficit in current earnings and profits of $73,000, which was attributable to poor performance throughout the year.The corporation made two distributions during the year: $60,000 on February 1 and $40,000 on December 1.The distributions will be treated as follows:

A) A maximum of $27,000 of the distributions will be treated as a dividend.
B) A portion of both the first and second distribution will be treated as a dividend.
C) Only the first distribution will give rise to dividend income.
D) Neither of the distributions will give rise to dividend income, since there are no current earnings and profits.
E) None of the above is true.