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Cerulean corporation has two equal shareholders, Eloise and Olivia. Eloise acquired her Cerulean stock three years ago by transferring property worth $700,000 basis of $300,000, for 70 shares of the stock. Olivia acquired 70 shares in cerulean corporation two year ago by transferring property worth $660,000, basis of $110,000. Cerulean corporation's accumulated E&P as of January 1 of the current year is $350,000. on march 1 of current year, the corporation distributed to Eloise property worth $120,000, basis to cerulean of $50,000. it distributed cash of $220,000 to Olivia. on July 1 of the current year, Olivia sold her stock to Magnus for $820,000. on December 1 of the current year, cerulean distributed cash of $90,000 each to Magnus and Eloise. what are the tax issues?

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