Lone Star Company is a calendar-year corporation, and this year Lone Star reported $102,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $12,240. Lone Star declared $30,600 in cash distributions on each of the following dates: April 1, July 1, October 1, and December 31.

a. How much of the $122,400 in total distributions will be treated as dividends?

b. Suppose that Matt owned all Lone Star's shares at the beginning of the year and sold half of the shares to Chris on June 1^stJune 1st for $40,800. How much dividend income will Matt recognize this year?

c. If Matt's basis in the Lone Star shares was $7,140 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star?