2. Rich owns stock in Small Corporation. His adjusted basis for the stock is $90,000. During the year, he receives a distribution from the corporation of $75,000 that is a return of capital (i.e., Small has no earnings and profits. The $75,000 distribution is reported in box 3 of form 1099DIV).

a. What are his tax consequences and adjusted basis of his stock after this transaction?

b. Assume instead that the amount of the distribution is $150,000. Determine the tax consequences and adjusted basis of the stock after the transaction.