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Problem 3 (10 points) On September 1 of the current year, Bulls, Inc. sold a...

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Problem 3 (10 points) On September 1 of the current year, Bulls, Inc. sold a parcel of land outside Chicago (basis $150,000 ) in exchange for $350,000 promissory note. The note was payable to Bulls, Inc. in five installments with the first payment due next year. Because Bulls, Inc. did not elect out of the installment method, none of the gain was taxable this year. Bulls, Inc. has accumulated e \& p of $25,000 at the beginning of the year. Before considering the effect of the land sale, Bulls had a deficit of $50,000 in current e \& p. Michael and Scottie are equal 50% shareholders in Bulls, Inc. Michael's stock basis is $15,000. Scottie's stock basis is $30,000. On December 31, Bulls, Inc. distributes $125,000 each to Michael and Scottie. What are the tax consequences of the distributions to each shareholder including amount of dividend, return or capital, gain (if any), new stock basis

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