Kent Corporation, an accrual basis taxpayer, has struggled to survive since its formation, six

years ago. As a result, it has a deficit in accumulated E & P at the beginning of the year of

$$340,000.$ This year, however, Kent earned a significant profit; taxable income was $$240,000.$

Consequently, Kent made two cash distributions to Martha, its sole shareholder: $$150,000$ on

July $1$ and $$150,000$ on December $31.$ The following information might be relevant to

determining the tax treatment of the distributions.

This year$$s taxable income included a net operating loss carryover of $$50,000.$

The corporation$$s Federal income tax liability is $$72,000$ for the year.

Kent paid nondeductible fines and kickbacks of $$10,000.$ The company also paid

nondeductible life insurance premiums of $$22,000.$

MACRS depreciation exceeds ADS depreciation by $$14,000.$

An election under $179$ to fully expense equipment was made this year for $$18,000.$

a$.$ Compute Kent$$s E & P for the year.

b$.$ What are the tax consequences of the two distributions made during the year to Martha

$($her stock basis is $$74,000)$