Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2019

Question:

Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2019 (effective immediately), in preparation for taking it public.  Miley had previously elected S corporation status on January 1, 2018.  At the time of the election, the corporation had an accumulated adjustments account balance of $150,000 and $450,000 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $135,000.  During 2020, Miley’s corporation reported $0 taxable income or loss.  Also, during 2020 the corporation made distributions to Miley of $80,000 and $60,000.  How are these distributions taxed to Miley assuming the following?
a. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on November 15, 2020.
b. Both distributions are in cash. The first was paid on June 15, 2020, and the second was paid on September 30, 2020.
c. Assume the same facts as in part (b), except the June 15 distribution was a property (noncash) distribution (fair market value of distributed property equal to basis).

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Taxation Of Individuals And Business Entities 2021

ISBN: 9781260247138

12th Edition

Authors: Brian Spilker, Benjamin Ayers, John Barrick, Troy Lewis, John Robinson, Connie Weaver, Ronald Worsham

Question Posted: