I:16-52 Earnings and Profits (E&P). Ohio Corporation has a $40,000 accumulated E&P balance at the beginning of the current year, and it has a $73,000 current E&P deficit for the current year (which is not a leap year). The corporation distributes $60,000 cash to its sole shareholder on May 5. The shareholder’s tax basis in her Ohio stock at the beginning of the year is $325,000.

a. What amount of the $60,000 distribution is taxable as a dividend (assume a ratable allocation of the deficit)?

b. What are the amount and character of any nondividend distributions to the shareholder?

c. What is the amount of Ohio’s accumulated E&P balance (deficit) on the last day of the year?