LO.5 Ten years ago, Vogel, Inc., an S corporation, purchased a plot of investment land for $45,000. This year, Vogel distributed the land, now worth $120,000, to Jamari, its majority shareholder.

a. Determine the effects of the distribution on the gross income of Vogel and Jamari and on Vogel's AAA balance.

b. How would your responses change if the land had been purchased for $120,000 and now was worth $45,000?