Response to the following problem:
Cardinal Corporation (a calendar year taxpayer) had a deficit in accumulated E & P of $500,000 at the beginning of the current year. Its net profit for the period January 1 through July 30 was $600,000, but its E & P for the entire taxable year was only $80,000. If Cardinal made a distribution of $120,000 to its sole shareholder on August 1, how will the shareholder be taxed?