Problem 5-35 (LO. 1, 3) Larry, the sole shareholder of Brown Corporation, sold his Brown stock to Ed on July 30 for $270,000. Larry's basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $120,000 on January 1 and has current E & P of $240,000. During the year, Brown made the following distributions: $450,000 cash to Larry on July 1 and $150,000 cash to Ed on December 30. If an amount is zero, enter "O". a. How will Larry and Ed be taxed on the distributions? Larry will have the following: Dividend income: $ Return of capital: $ Capital gain: $ Ed will have the following: Dividend income: Return of capital: $ Capital gain: $ b. How much gain will Larry recognize on the sale of his stock to Ed? Larry recognizes a capital gain of $ on the sale of the stock