Juan is a shareholder in Western Life Corporation, a calendar year S- Corporation. Western Life has been an S-Corporation since the inception of the corporation. At the end of the 2019 Juan’s share of the accumulated adjustments account (AAA) was $20,000 while his basis in his stock was $30,000. If Western Life makes a distribution of $40,000 on December 31, 2019 what will be the tax impact to Juan from the distribution? 

a. No tax impact to Juan 

b. A capital gain of $10,000 to Juan 

c. A capital gain of $20,000 to Juan 

d. A taxable dividend of $20,000 to Juan

Answer rating: 100% (QA)

Solution Option A is the Correct Answer Explanation As per given ... View the full answer