Swallow, Inc., is going to make a distribution of $750,000 to Marjean who is in the 35% tax bracket.

a.Determine the tax liability to Marjean if the form of the distribution is a dividend.

b.Determine the tax liability to Marjean if the form of the distribution is a stock redemption. Assume Marjean's adjusted basis for the stock redeemed is $400,000 and that she has owned the stock for three years.