Question: S Distributions PROBLEM 2: An S corporation that was formerly a C corporation sells an asset for $300,000. The asset had a basis to the

S Distributions

PROBLEM 2: An S corporation that was formerly a C corporation sells an asset for $300,000. The asset had a basis to the corporation of $200,000. This asset is subject to the built-in-gains tax, and all of the gain realized from the sale was built-in at the date of conversion from a C corporation to an S corporation.

Part A: What is the result to the S corporation?

Part B: What is reported to the shareholder as a result of this sale?

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