tte (a 40 percent shareholder) received a $25,500 distribution (the remaining shareholders rec 50 in distributions). (Assume her stock basis is $51,000 after considering her share of Bombay's ar but before considering the effects of the distribution.) red: at are the amount and character of income or gain Nicolette must recognize from the distributi nat is her basis in her Bombay stock at the end of the year?
tte (a 40 percent shareholder) received a $25,500 distribution (the remaining shareholders rec 50 in distributions). (Assume her stock basis is $51,000 after considering her share of Bombay's ar but before considering the effects of the distribution.) red: at are the amount and character of income or gain Nicolette must recognize from the distributi nat is her basis in her Bombay stock at the end of the year?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter15: S Corporations
Section: Chapter Questions
Problem 2CE
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Question
Transcribed Image Text:At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account
balance of $19,400 and accumulated E&P of $25,500 from a previous year as a C corporation. During the year,
Nicolette (a 40 percent shareholder) received a $25,500 distribution (the remaining shareholders received
$38,250 in distributions). (Assume her stock basis is $51,000 after considering her share of Bombay's income for
the year but before considering the effects of the distribution.)
Required:
a. What are the amount and character of income or gain Nicolette must recognize from the distribution?
b. What is her basis in her Bombay stock at the end of the year?
Character
Amount
Short-term capital gain
25,500 X
a.
b.
Basis
2$
35,700 O
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