(3). Now assume that Ys basis in its X stock is $100 and As basis in his X stock is $40. On January 2 of the current taxable year, X distributes $100 in cash to Y and $100 in cash to A. As of the end of the preceding taxable year, Xs accumulated E&P was zero. What are the tax consequences of this distribution to X, Y, and A? [Hint: First compute Xs current-year taxable income and then compute current-year E&P before reducing the E&P for the distribution (interim E&P); after reducing for the distribution, compute final accumulated E&P.

How would your answer to (3) above change if, on December 1 of the current year (the declaration date), Xs board of directors voted to pay the $200 distribution by mailing the checks on December 31 of the current taxable year(the payment date, the identification of which is a practice generally used only by widely held corporations) to shareholders of record on December 15 of the current taxable year (the record date), such checks actually being received Y and A In the mail on January 2 of the next year? Assume that Y and A are the public and that they are the only shareholders (as in the basic facts).