The eligibility requirements for s status continued

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: CPA-01952 Type1 M/C 83. CPA-01952 ARE R03 #8 A-D Corr Ans: C PM#3 R 3-02 Page 52 Baker, an individual, owned 100% of Alpha, an S corporation. At the beginning of the year, Baker's basis in Alpha Corp. was $25,000. Alpha realized ordinary income during the year in the amount of $1,000 and a long-term capital loss in the amount of $3,000 for this year. Alpha distributed $30,000 in cash to Baker during the year. What amount of the $30,000 cash distribution is taxable to Baker? a. b. c. d. $0 $5,000 $7,000 $30,000 40 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 CPA-01952 Explanation Choice "c" is correct. The taxability of distributions to shareholders in S corporations with no C corporation earnings and profits is as follows: 1. To the extent of basis in stock - tax free; treated as return of capital. 2. Any distributions in excess of the shareholder's basis - taxable; treated as capital gain. Based...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online