Hello, Inc., is going to make a distribution of $750,000 to Mark who is in the 35% tax bracket.

Required:

a. Determine the tax liability to Mark if the form of the distribution is a dividend.

b. Determine the tax liability to Mark if the form of the distribution is a stock redemption. Assume Mark's adjusted basis for the stock redeemed is $400,000 and that she has owned the stock for three years.