Currently,Brown Corporation (E & P of $800,000)has 1,000 Shares of Common

Currently,Brown Corporation (E & P of $800,000) has 1,000 shares of common stock outstanding.Pat owns 300 shares.His wife owns 300 shares,his daughter owns 200 shares,and his father owns 200 shares.Two years ago,Pat transferred $50,000 to Brown Corporation in exchange for 100 newly issued shares of nonvoting preferred stock.In the current year,Brown Corporation redeems Pat's preferred stock for $60,000,its fair market value.With respect to the distribution in redemption of the preferred stock:

A) Pat has a long-term capital gain of $10,000.
B) Pat has a long-term capital gain of $60,000.
C) Pat has dividend income of $10,000.
D) Pat has dividend income of $60,000.
E) None of the above.