On January 2, Chaz transfers cash of $179,800 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $44,950. The income is credited to the earnings and profits account of the corporation. The corporation distributes $13,485 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $13,485 distribution? Chaz has a taxable dividend of $ 13,485 and the corporation has a deduction of $ 0 b. Assume, instead, that Chaz transfers to the corporation cash of $89,900 for stock and cash of $89,900 for a note of the same amount. The note is payable in equal annual installments of $8,990 and bears interest at the rate of 6%. No distributions are made during the year to Chaz. However, at the end of the year, the corporation pays an amount to meet the loan obligation (i.e., the annual $8,990 principal payment plus the interest due). Determine the total amount of the payment and its tax treatment to Chaz and the corporation. The corporate payment to Chaz totals $ 179,800 X of which $ 13,485 X Chaz has interest of $ 100 100 X and a note repayment of 0X 100 X is taxable to Chaz. The corporation has a deduction of $