Blackhawk Company reports current E&P of negative $300,000. Its accumulated E&P at the beginning of the year was a negative $200,000. Blackhawk distributed $400,000 to its sole shareholder, Melanie Rushmore, on June 30 of this year. Melanie's tax basis in her Blackhawk stock is $75,000.
a. How much of the $400,000 distribution is treated as a dividend to Melanie?
b. What is Melanie's tax basis in her Blackhawk stock after the distribution?
c. What is Blackhawk's balance in accumulated E&P on the first day of next year?