At December 31 , Year 1 , the Colonel Corporation had $10,000 of accumulated E\&P. For the taxable year, Year 1, Colonel had Current E\&P (before distribution) of $15,000. In year 2 , Cole Corp. made a distribution of $35,000. The sole shareholder had a basis in the stock of $5,000 at the time of the distribution. What is the tax treatment of this transaction? Cole Corp. - Shareholders -1