Jordan transfers $450,000 in cash to newly formed Watson Corporation for 100% of Watson's stock. In the first year of operations, Watson's taxable income before any payments to Jordan is $175,000.

What total amount of taxable income must Jordan and Watson each report in the following scenario? Requirement a. Watson pays a $20,000 dividend to Jordan. Jordan reports taxable income of $ Watson Corporation reports taxable income of What total amount of taxable income must Jordan and Watson each report in the following scenario? Requirement b. Assume that when Watson was formed, Jordan transferred his $450,000 to the corporation for $225,000 of Watson stock and $225,000 in Watson notes. The notes are repayable in four annual installments of $56,250 plus 10% annual interest on the unpaid balance. During the current year, Watson gives Jordan S56250 n repayment of the first note plus$225 Jordan reports taxable income of $ 1. Watson Corporation reports taxable income of $ interest