Aaron and michele, equal shareholders in cavalier corporation, receive $25,000 each in distributions on december 31 of the current year. during the current year, cavalier sold an appreciated asset for $60,000 (basis of $15,000). payment for the sale of the asset will be made as follows: 50% next year and 50% in the following year, with interest payable at a rate of 6 percent. before considering the effect of the asset sale, cavalier’s current year e & p is $40,000 and it has no accumulated e & p. how much of aaron’s distribution will be taxed as a dividend? a. $0 b. $20,000 c. $25,000 d. $42,500 e. none of the above.