XYZ was a C corporation until it became an S-corp. status on Jan 1 of Year 2. XYZ had accumulated E&P of $25,000 on Dec 31, Year 1. For the period Year 2 to Year 7, XYZ had ordinary income of $90,000 and made shareholder distributions of $60,000. In Year 8, XYZ had ordinary income of $45,000 and made distributions to shareholders of $100,000.

a. Calculate XYZ AAA balance at Dec 31, Year7

b. Calculate the tax results of the distribution in year 8.