Elk Company reports a deficit in current E&P of ($275,000) and positive accumulated E&P of $450,000. Elk distributed $350,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $131,250. What is the tax treatment of the distribution to Barney, and what is his tax basis in Elk stock after the distribution?

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