six years ago, Arthur transferred property he using in his sole proprietorship to Green corporation for 1,000 shares of green corporation stock in a...

six years ago, Arthur transferred property he using in his sole proprietorship to Green corporation for 1,000 shares of green corporation stock in a transaction that qualified under Sec. 351. the assets had a tax basis to her of $200,000 and a fair market value of $500,000 on the date of the transfer. In the current year, Green corporation ( E&P of $750,000 ) redeems 300 shares from Arthur for $120,000 in a transaction that qualifies for a sale or exchange treatment. With respect to the redemption Arthur will have:

1. $120,000 dividend
2. $60,000 dividend
3. $120,000 capital gain
4. $60,000 capital gain