Indigo, Inc., a calendar year S corporation, has no AEP. During the year, Amari, an individual shareholder of the corporation, receives a cash distribution of $18,500 from Indigo. Amari's basis in stock is $15,000. In this case: a. Amari receives $3,500 tax-free. b. Amari has ordinary income of $15,000. c. Amari has a negative stock basis of $3,500. d. Amari receives $15,000 tax-free. e. Amari has a capital gain of $18,500.
Indigo, Inc., a calendar year S corporation, has no AEP. During the year, Amari, an individual shareholder of the corporation, receives a cash distribution of $18,500 from Indigo. Amari's basis in stock is $15,000. In this case: a. Amari receives $3,500 tax-free. b. Amari has ordinary income of $15,000. c. Amari has a negative stock basis of $3,500. d. Amari receives $15,000 tax-free. e. Amari has a capital gain of $18,500.
Chapter22: S Corporations
Section: Chapter Questions
Problem 19CE
Related questions
Question
Indigo, Inc., a calendar year S corporation, has no AEP. During the year, Amari, an individual shareholder of the corporation, receives a cash distribution of $18,500 from Indigo. Amari's basis in stock is $15,000. In this case:
a. Amari receives $3,500 tax-free.
b. Amari has ordinary income of $15,000.
c. Amari has a negative stock basis of $3,500.
d. Amari receives $15,000 tax-free.
e. Amari has a capital gain of $18,500.
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