On January 1, Cotton Candy Corporation (a calendar year taxpayer) has accumulated E & P of $500,000. Its current E & P is $140,000 (before considering a dividend distribution).At the end of the year, Cotton Candy distributes $840,000 ($420,000 each) to its equal shareholders, Mary and Larry.Mary has a basis in her stock of $105,000, while Larrys basis is $150,000.What is the effect of the distribution by Cotton Candy Corporation to Mary and Larry?