Brody, the sole shareholder of Hawk Corporation, has a stock basis of $350,000 at the beginning of the year. On July 1, he sells all of his stock to Matt for $2 million. On January 1, Hawk has accumulated E & P of $270,000 and current year E & P of $340,000. Hawk makes the following cash distributions: $450,000 to Brody on March 31 and $270,000 to Matt on December 1. Use the format below to (1) determine how the distributions are taxed to Brody and Matt? (2) What is Brody's recognized gain on the 7/1 sale to Matt? Current Year E & P Accumulated E & P Distributions Tax treatment of distribution & Sale Div. Inc. Ret. of Cap Basis Cap. Gains