StClair Company Reports Positive Current E&P of $500,000 in Year

Essay

St.Clair Company reports positive current E&P of $500,000 in year 1 and positive accumulated E&P at the beginning of the year of $400,000.St.Clair Company distributed $600,000 to its sole shareholder,Danielle Brush on December 31,year 1.Danielle's tax basis in her St.Clair stock is $120,000.How much of the $600,000 distribution is treated as a dividend to Danielle and what is her basis in St.Clair stock after the distribution?