$36$

Multiple Choice

$1$ point

$x$ co$.$ is an S corporation. X co$.\text{'}$s accumulated adjustments account is $$60,000.$

$x$ co$.$ has accumulated earnings and profits of $$80,000.$

$x$ co$.$ makes a pro$-$rata cash distribution to shareholder A of $$150,000.$

$A$ is a $25\%$ shareholder of $x$ co$.$ and has $$100,000$ basis in the stock.

A should report the distribution as follows:

$$100,000$ return of capital, $$8,000$ dividend, $$42,000$ capital gain

None of these.

$$100,000$ return of capital, $$50,000$ capital gain

$$100,000$ return of capital, $$20,000$ dividend, $$30,000$ capital gain

$37$

Multiple Choice

$1$ point