On April 1, Delta Corporation Distributes $120,000 in Cash to Each

question 29

Essay

On April 1, Delta Corporation distributes $120,000 in cash to each of its two equal shareholders, Sarah and Matt. At the time of the distribution, Delta's E&P is $160,000. Sarah's basis in her stock is $50,000 and Matt's basis in his stock is $20,000. How are the distributions characterized to Sarah and Matt? Be specific.

---

Definitions:

Lactic Acid

A chemical byproduct of anaerobic respiration, mostly known for causing muscle fatigue and soreness during intense physical activity.

Epiglottis

A thin, flexible structure that guards the entrance to the larynx, preventing food from entering the airway during swallowing.

Nasal Cavity

The large air-filled space behind the nose, involved in breathing and smelling, lined with mucous membranes to filter, warm, and humidify air.

Glottis

The opening between the vocal cords in the larynx, playing a key role in producing vocal sounds and regulating airflow during breathing.