Question: ACE is an S corporation whose sole shareholder is Abe. After considering the current year's income Abe has a basis is his stock of $120,000

ACE is an S corporation whose sole shareholder is Abe. After considering the current year's income Abe has a basis is his stock of $120,000 and ACE has $200,000 in its accumulated adjustments account. ACE distributes property to Abe on the last day of the tax year with an adjusted basis of $80,000 and fair market value of $110,000. How much gain or loss does ACE recognize on this distribution?

What if instead ACE distributes property to Abe on the last day of the tax year with an adjusted basis of $80,000 and fair market value of $40,000. How much income does Abe recognize from this distribution?

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