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)