Black Corporation and Tom each own 50% of Tan Corporation's common stock. On January 1, Tan has a deficit in accumulated E & P of $200,000. Its current E & P is $90,000. During the year, Tan makes cash distributions of $40,000 each to Black and Tom.

a. How are the two shareholders taxed on the distribution?

b. What is Tan Corporation's accumulated E & P at the end of the year?

Please show all work and explain your calculations. Thank you.