Nicholas owns 60% of the shares of Orange Corp. (an S corporation with no accumulated E&P). Nicholas purchased his shares at the beginning of 2020 for $1,000. Orange Corp. reported the following...

Nicholas owns 60% of the shares of Orange Corp. (an S corporation with no accumulated E&P). Nicholas purchased his shares at the beginning of 2020 for $1,000. Orange Corp. reported the following during 2020: Ordinary business income: $40,000 Separately stated income items: $3,000 Separately stated loss items: $8,000 In addition, Orange Corp. paid off corporate debt (nonrecourse) of $10,000 in 2020. If Orange Corp. distributed $10,000 to Nicholas on March 1, 2020, what amount of the distribution is treated as capital gain?