7. Ima Drinker owned 100 shares in Kola Corporation, a C corporation. Her basis in the 100 shares was $1,000. Kola had a stock split and issued her another 100 shares (market value $2,000). Explain the tax consequences.

8. One shareholder corporation. Earnings & Profits are $50,000. Shareholder's basis is $20,000. Cash distribution of $80,000. Show tax result to shareholder and corporation.