E & P Deficit

Atlantic Corporation, a calendar-year taxpayer, has $120,000 of accumulated E & P deficit as of January 1. Atlantic's current E & P is $40,000. The corporation makes a $50,000 distribution to its shareholders. (Shareholders have stock basis of $60,000.. How is the $50,000 distribution to the shareholders characterized by the shareholders? What is the amount of Atlantic's E & P deficit at the end of the year?

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