Cerulean Corporation has two equal shareholders, Eloise and Olivia.

Eloise acquired her Cerulean stock three years ago by transferring property worth $ 700,000, basis of $ 300,000, for 70 shares of the stock.

Olivia acquired 70 shares in Cerulean Corporation two years ago by transferring property worth $ 660,000, basis of $ 110,000.

Cerulean Corporations accumulated E & P as of January 1 of the current year is $ 350,000.

On March 1 of the current year, the corporation distributed to Eloise property worth $ 120,000, basis to Cerulean of $ 50,000.

It distributed cash of $ 220,000 to Olivia.

On July 1 of the current year, Olivia sold her stock to Magnus for $ 820,000.

On December 1 of the current year, Cerulean distributed cash of $ 90,000 each to Magnus and Eloise.

a) What are the tax consequences