Drop, Inc., a calendar year S corporation, distributes $16,000 cash to its only shareholder, Luetta, on December

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Drop, Inc., a calendar year S corporation, distributes $16,000 cash to its only shareholder, Luetta, on December 31. Luetta’s basis in her stock is $20,000. Drop’s AAA balance is $9,000, and Drop holds $3,000 of AEP and $1,000 of OAA before the distribution. Complete the following chart using spreadsheet software such as Microsoft Excel.

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South-Western Federal Taxation 2022 Corporations, Partnerships, Estates And Trusts

ISBN: 9780357519240

45th Edition

Authors: William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman

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Question Posted: May 14, 2023 04:39 AM

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Drop, Inc., a calendar year S corporation, distributes $16,000 cash to its only shareholder, Luetta, on December

Question:

From AAA account From AEP account From OAA account From Luetta's stock basis Distribution from Account Effect on Stock Basis Balance after Distribution

Step by Step Answer:

A cash distribution from an S corporation with AEP comes first from the AAA limit...View the full answer

South-Western Federal Taxation 2022 Corporations, Partnerships, Estates And Trusts

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