Jonathan (an individual) owns 100% of the stock of Husky, Inc. (a C corporation) and 100% of the stock of Calhoun, Inc. (another C corporation). Calhoun, Inc. is very successful and has millions in earnings and profits. Husky has not fared so well and has no earnings and profits. In the current year, Husky ran out of cash and could not make its payroll. Because of this situation, Jonathan directed Calhoun, Inc. to pay $100,000 in wages to employees of husky. The $100,000 payment was not structured as a loan. [Assume that proper tax was withheld from the wages, the wages were still reported to workers on form W-2, etc. -- This is not a payroll tax issue.]

A. How should Calhoun, Inc. treat the $100,000 payment for tax purposes?

B. How should Jonathan treat the $100,000 payment for tax purposes?