Alpha distributed 30000 in cash to baker during the

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Unformatted text preview: iew, PassMaster Questions Lecture: Regulation 3 Choice "a" is incorrect. The amount distributed to a shareholder does not need to be returned to the S corporation. Choice "b" is incorrect. Distributions do not increase a shareholder's basis. Choice "d" is incorrect. Distributions have no effect on a shareholder's basis if they are out of accumulated earnings and profits and are therefore taxable. They would also have no effect on a shareholder's basis if the basis is already zero, which would result in the shareholder recognizing a gain to the extent of the distribution. In this case, we are not told whether or not the basis is already zero. CPA-01941 Type1 M/C A-D 82. CPA-01941 ARE R03 #4 Corr Ans: C PM#2 R 3-02 Page 52 Stahl, an individual, owns 100% of Talon, an S corporation. At the beginning of the year, Stahl's basis in Talon was $65,000. Talon reported the following items from operations during the current year: Ordinary loss Municipal interest income Long-term capital gain Short-term capital loss $10,000 6,000 4,000 9,000 What was Stahl's basis in Talon at year-end?...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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