Carlota and Dave formed an S corporation; Carlota owns 75% of the out-standing shares, and Dave owns the rest. When the entitys AAA balance is $1,000,000, it distributes an asset to each shareholder; the basis of each asset to the corporation is $150,000. Carlotas asset is worth $210,000, and Daves is worth $180,000.

a. How much gain, if any, does the the corporation recognize as a result of the distribution?

b. By how much, if any, does the distribution increase Daves gross income?

c. By how much, if any, does the distribution increase Carlotas gross income?