At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account balance of $19,800 and accumulated E&P of $26,000 from a previous year as a C...

At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account balance of $19,800 and accumulated E&P of $26,000 from a previous year as a C corporation. During the year, Nicolette (a 40 percent shareholder) received a $26,000.

What is the amount and character of gain Nicolette must recognize from the distribution?