1. Assume ABC reported current E&P of $60,000. The balance in accumulated E&P at the beginning of the year was negative $20,000. On December 31, ABC distributed $48,000 to Jack and $16,000 to Jill. Jack has a tax basis in his ABC stock of $24,000. Jills stock basis in her ABC stock is $10,000.

1. What amount of income will Jack and Jill report?

2. What tax basis will Jack and Jill have in their ABC stock after the distribution?