How to solve

For $2024,$ Jackson Corporation has positive $30,000$ of accumulated EP and negative $12,000$ of current EP$.$ On August $1,2024,$ Jackson Corporation distributes $40,000$ to its sole shareholder Latoya.

$($a$)$ How much of Lotoya's distribution will receive dividend treatment?

$2$

$($b$)$ How much of Lotoya's distribution will reduce her basis in her stock?

For $2024,$ Jackson Corporation has positive $30,000$ of accumulated EP and negative $12,000$ of current EP$.$ On August $1,2024,$ Jackson Corporation distributes $40,000$ to its sole shareholder Latoya.

$($a$)$ How much of Lotoya's distribution will receive dividend treatment?

$2$

$($b$)$ How much of Lotoya's distribution will reduce her basis in her stock?