LO.4 Castle and Dave formed an S corporation; Castle owns 75% of the outstanding shares, and Dave owns the rest. When the entity's AAA balance is $1 million, it distributes an asset to each shareholder; the basis of each asset to the corporation is $45,000. Castle's asset is worth $90,000, and Dave's is worth $50,000.

a. How much gain, if any, does the the corporation recognize as a result of the distribution?

b. By how much, if any, does the distribution increase Dave's gross income?

c. By how much, if any, does the distribution increase Castle's gross income?