During the current year, Gnatcatcher, Inc. (E & P of $1,150,000), distributed $490,000 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 $122,500 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.

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

The distribution is taxed as a

dividendsale or exchange

and Brandi's tax liability is $fill in the blank 2ab0c2fff034feb_2.

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

The distribution is taxed a

dividendsale or exchange

and Yuen's tax liability is $fill in the blank 59a34cfa3fc607c_2.