Queen owns 100% of Royal Corporation. Royal Corporation was initially formed as a C corporation but has since elected to be treated as an S corporation. At the end of 2023, Royal Corporation's accumulated adjustments account (AAA) balance is $60,000 before considering any distributions, and its accumulated E&P from its years as a C corporation is $15,000. On December 31, Royal Corporation distributed $80,000 to Queen. Queen's stock basis before the distribution was $90,000.

a) (4 points) What is the amount and character of income Queen must recognize on the distribution?

b) (4 points) What is Queen's stock basis after accounting for the distribution?