At the start of the current year, Indigo Corporati…

At the start of the current year, Indigo Corporation (a calendar year taxpayer) has accumulated E & P of $240,000. Indigo?s current E & P is $160,000, and at the end of the year, it distributes $440,000 ($220,000 each) to its equal shareholders, Sarah and Mason. Their basis in the stock is $8,000 for Sarah and $32,000 for Mason. How is the distribution treated for tax purposes?