Corporation A distributed property with a fair market value

Corporation A distributed property with a fair market value of $100,000 and an adjusted basis of $70,000 to James. Prior to the distribution, Corporation A had a deficit in accumulated earnings and profits of $400,000 and current earnings and profits of $10,000. James has stock basis Corporation A of $80,000.

1. How much of this distribution is dividend, return or capital, and capital gain.

2. Assume that James is an individual in the 37% tax bracket. Determine James’ tax liability for this distribution.

3. Assume instead that James is a C corporation (James, Inc.) and that James, Inc. has a 25% interest in ZZZ. Determine the tax liability of James, Inc. on this distribution of property.