S Coproration

Question 1

Shareholder Gain on Distribution

Answer 1

1. AAA = Tax free reduction of basis
2. E&P = Taxable Dividend
3. Basis = Tax free return of capital
4. Excess of Basis = Capital gain

Capital Loss is carried forward and not included

Question 2

Share of Loss

Answer 2

% Ownership * (Days Owned / 365) * Ordinary Loss

Question 3

Built in Gain

Answer 3

C Corp electing to be S corp
-Built in gain = FMV - Basis = $50,000
First $50,000 of gain taxed at C Corp rate

Question 4

Shareholder Basis

Answer 4

Initial Basis
\+ Additional Contributions
\+ Income
- Distributions*
- Loss or Expense
= Ending Basis