The books and records of May, Inc., a calendar-year S corporation for 20 years, reflect the following information for the current year (Year 1): Accumulated adjustments account 1/1/Yr 1 $ 60,000 Accumulated earnings and profits 1/1/Yr 1 150,000 Ordinary income for Year 1 204,000 May, Inc., has one shareholder, Paula, whose basis in May's stock was $100,000 on January 1, Year 1. During Year 1, May distributed $300,000 to Paula. What is the amount of the distribution that would be treated as a dividend by Paula?
1) $36,000
2) $0
3) $264,000
4) $300,000