Jay Corporation has two equal shareholders, Keith and Brian. Keith acquired his Jay stock 3 years ago by transferring property worth $700,000, basis of $300,000, for 70 shares of stock. Brian acquired 70 shares in Jay Corporation 2 years ago by transferring property worth $660,000, basis of$110,000. Jay Corporation's accumulated E&P as of January 1 of the current year is $350,000. On March 1 of the current year, Jay Corporation distributed to Keith property worth $120,000, basis to Jay Corporation of $50,000. It distributed cash of $220,000 to Brian. On July 1 of the current year, Keith sold his stock to Maurice for $820,000. On December 1 of the current year, Jay Corporation distributed cash of $90,000 each to Maurice and Brian. What are the tax issues?
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