JJB Corporation, an accrual basis taxpayer, has struggled to survive since its formation, six years ago. As a result, it has a deficit in accumulated...

JJB Corporation, an accrual basis taxpayer, has struggled to survive since its formation, six years ago. As a result, it has a deficit in accumulated E & P at the beginning of the year of $100,000. This year, however, JJB earned a significant profit; taxable income was $300,000 and its EP for the current year is $225,000. Consequently, JJB made one cash distribution (at year end) to Jeff, its sole shareholder: $350,000. What are the tax consequences to the shareholder and to the corporation?