During 2010,Lion Corporation Incurs the Following Transactions

During 2010,Lion Corporation incurs the following transactions.

Lion maintains a valid S election and does not distribute any assets (cash or property) to its sole shareholder,Penny.As a result,Penny must recognize:

A) Ordinary income of $103,000 and long-term capital gain of $5,000.
B) Ordinary income of $103,000,long-term capital gain of $10,000,and $4,000 short-term capital loss.
C) Ordinary income of $108,000.
D) None of the above.