EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for $200,000.The redemption represented 20 percentof the corporation's outstanding stock. The redemption was treated as an exchange by the shareholder.

By what amount does EG reduce its total E&P as a result of the redemption under the following E&P assumptions?

a. EG's total E&P at the time of the distribution was $2,000,000.

b. EG's total E&P at the time of the distribution was $500,000.