What is the tax treatment for the distribution of $350,000 each to Brandi and Yuen by Gnatcatcher, Inc., in redemption of some of their stock during the current year, considering an Earnings and Profits (E&P) of $1,700,000?

A) It is treated as a dividend income.
B) It is considered a capital gain for both Brandi and Yuen.
C) It is taxed as ordinary income for both shareholders.
D) It is tax-free as it is a stock redemption.