Partridge corporation, a calendar year taxpayer, has $350,000 of current Eamp;P and a deficit in accumulated Eamp;P of $150,000.

Partridge corporation, a calendar year taxpayer, has $350,000 of current E&P and a deficit in accumulated E&P of $150,000. If Partridge pays $500,000 distribution to its shareholders on July 1, how much dividend income do the shareholders report?

1. $0
2. $200,000
3. $350,000
4. $500,000