Question: Abc Corp functioned as C Corporation for several years before filing a Form 2553 and becoming an S Corporation on 1/1/2020. ABC Corp had $25,000

  1. Abc Corp functioned as C Corporation for several years before filing a Form 2553 and becoming an S Corporation on 1/1/2020. ABC Corp had $25,000 of E&P before it made the S election.

  2. In 2020, ABC Corp has an ordinary business loss of ($30,000).

  3. Daniel is a 50% shareholder in ABC and has a basis of $45,000 at 1/1/2020. ABC distributes $100,000 to Daniel on 12/31/2020.

  4. What are the tax consequences of this distribution?

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