Steel Corp has 1,000 shares outstanding and two equal shareholders, Frank and Bob. Bob has a basis of $5,000 in his 500 shares and Frank has a basis of $2,500 in his 500 shares, both owners purchased their shares 3 years ago. Determine the tax consequences of the following distributions to the shareholders and to Steel Corp.

A. Assume Steel Corp has accumulated E&P of $5,000 and current E&P of $3,000 for the year and makes a distribution of $5,000 on July 1 of the tax year and another distribution of $10,000 on December 31^st of the tax year. Bob sells his shares to Mark on October 15^th for $10,000.

B. Disregarding A, assume Steel Corp has a deficit in accumulated E&P of $5,000 and current E&P of $3,000 and makes a distribution of $9,000 on December 31^st of the tax year ($4,500 to each shareholder).

C. Disregarding A and B above, assume Steel Corp has accumulated E&P of $5,000 and a current E&P deficit of $4,000 for the year and makes a distribution of $5,000 on July 1 of the tax year.