1. Hawkeye Company reports current E&P of $300,000 this year and accumulated E&P at the beginning of the year of $200,000. Hawkeye distributed $450,000 to its sole shareholder, Ray Kinsella, on December 31 of this year. Rays tax basis in his Hawkeye stock is $75,000. How much of the $450,000 distribution is treated as a dividend to Ray?

1. Jayhawk Company reports current E&P of $350,000 and accumulated E&P of negative $200,000. Jayhawk distributed $400,000 to its sole shareholder, Christine Rock, on the last day of the year. Christines tax basis in her Jayhawk stock is $75,000. How much of the $400,000 distribution is treated as a dividend to Christine?