Mulberry Corporation has an August 31 year-end. Mulberry had $50,000 in accumulated E & P at the beginning of its 2015 fiscal year (September 1, 2014) and during the year, it incurred a $75,000 operating loss. It also distributed $65,000 to its sole shareholder, Charles, on November 30, 2014. If Charles is a calendar year taxpayer, how should he treat the distribution when he files his 2014 income tax return (assuming the return is filed by April 15, 2015)?
A. The distribution has no effect on Charles in the current year.
B. $50,000 of dividend income and $15,000 recovery of capital.
C. $60,000 of dividend income and $5,000 recovery of capital.
D. $65,000 of dividend income.
E. None of the above