On December 24 of the preceding year, Y and A incorporated X and capitalized X with cash of $100 each. on December 31 of that preceding year, Y and A received distributions from X of $5 each; X did not earn any income for that year. In addition, Y and A received distributions of $5 each, in the current year. Which distributions should be gross icnome to Y and A, in what amounts, and why? What does E&P have to do with this?

Alternative: A just bought the X shares on December 30 of the current year from another shareholder for FMV of $145, before the declaration and payment of a $5 distribution to A on December 31 of the current year. Should the distriubtion be taxable incoem to A? Why?