Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $20,000, Holbrook's AAA balance is $8,000, and Holbrook holds $2,500 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $15,000 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0". Beginning stock basis From AAA account From AEP account From Cody's stock basis Ending stock basis $ $ $ $ Basis in Stock $20,000 8,000 2,500 X $ 4,500 Distribution from Account 5,000 X -8,000 0 -4,500 X Effect on Stock Basis 0 X 7,500 X

Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $20,000, Holbrook's AAA balance is $8,000, and Holbrook holds $2,500 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $15,000 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0". Beginning stock basis From AAA account From AEP account From Cody's stock basis Ending stock basis $ $ $ $ Basis in Stock $20,000 8,000 2,500 X $ 4,500 Distribution from Account 5,000 X -8,000 0 -4,500 X Effect on Stock Basis 0 X 7,500 X

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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