ASSUME ALL CORPORATIONS ARE C CORPORATIONS

Corporation X-a C Corporation-distributed the following to its sole shareholder-John-during the year: Inventory-cost/basis of $5,000 with a fair market value of $9,000. The following facts are provided: Corp X has accumulated E and P of $ 12, 000 and current E and P of $2,000 - without regard to this distribution. Corp X's tax rate is 21 percent. John has a basis in the corporate stock of $23,000. 1. What are the tax effects of this distribution to the corporation? 2. What is the Accumulated earnings and profits as of the end of the year? 3.what are the effects of this distribution to John? 4.what is John's basis in his Corp. X stock after the receipt of this distribution?