During the current year, Gnatcatcher, Inc., $($E & P of $$1,700,000)$ distributed $$350,000$ each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their shares five years ago. Each shareholder is in the $32\%$ tax bracket, and each had a $$87,500$ basis in the redeemed stock. Assume taxpayers in the $32\%$ tax bracket are subject to the long$-$term capital gains and qualified dividends tax rate of $15\%.$

If required, round your answers to nearest dollar.

a$.$ Assume that the distribution to Brandi is a qualifying stock redemption.

The distribution is taxed as a and Brandi's tax liability is $

b$.$ Assume that the distribution to Yuen is a nonqualified stock redemption.

The distribution is taxed : and Yuen's tax liability is $

dividend

sale or exchange