Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2017 (effective immediately), in preparation for taking it public. 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 2018, Miley’s corporation reported $0 taxable income or loss. Also, during 2018 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, and the first was paid on June 15, 2018, and the second on November 15, 2018.
b. Both distributions are in cash, and the first was paid on June 15, 2018, and the second on September 30, 2018.
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).