Please help I help on the analysis and discussion sections along with Citations for this memo.

In 2013, Flamingo paid Kenny $800,000 in compensation.John received $650,000.As part of an audit in late 2014, the IRS found the compensation of both officers to be excessive.It disallowed deductions for $400,000 of the payment to Kenny and $350,000 of the payment to John.The IRS recharacterized the disallowed payments as constructive dividends.Complying with the resolution by the board of directors, both Kenny and John repaid the disallowed compensation to Flamingo Corporation in 2015.

Determine how their repayments are treated for Federal income tax purposes.John still is working as a highly compensated executive for Flamingo, while Kenny is retired and living off his savings.