On January 1, ABC Corporation (a calendar year taxpayer) has accumulated E & P of $400,000. Its current E & P for the year is $120,000 (before considering dividend distributions). During the year, ABC distributes $800,000 ($400,000 each) to its equal shareholders, Mary and Larry. Mary has a basis in her stock of $95,000, while Larrys basis is $160,000. What is the effect of the distribution by ABC Corporation on Mary and Larry?