Homework Help is Here – Start Your Trial Now!
Business
Accounting
a. $2,000.

a. $2,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

7.

 

Tandy Corp., a calendar year S corporation, has $5,000 of accumulated earnings and profits (AE&P) as of the beginning of 2022. At the end of 2022, pre-distribution AAA (i.e., the AAA balance before considering the distribution) totals $8,000. During 2022, Polly, the sole shareholder, receives a cash distribution of $12,000 from Tandy. Polly's pre- distribution basis in her stock (i.e., before adjustment for the distribution) is $10,000. Tandy Corp. elected S status in 1999. How much of this distribution should Polly report in her 2022 personal tax return as capital gain? a. $2,000. b. zero. c. $4,000. d. $5,000. How much of this distribution should Polly report in her 2022 personal tax return as ordinary income? a. $2,000. a. zero. b. $4,000. c. $5,000. d. $2,000.
Transcribed Image Text:Tandy Corp., a calendar year S corporation, has $5,000 of accumulated earnings and profits (AE&P) as of the beginning of 2022. At the end of 2022, pre-distribution AAA (i.e., the AAA balance before considering the distribution) totals $8,000. During 2022, Polly, the sole shareholder, receives a cash distribution of $12,000 from Tandy. Polly's pre- distribution basis in her stock (i.e., before adjustment for the distribution) is $10,000. Tandy Corp. elected S status in 1999. How much of this distribution should Polly report in her 2022 personal tax return as capital gain? a. $2,000. b. zero. c. $4,000. d. $5,000. How much of this distribution should Polly report in her 2022 personal tax return as ordinary income? a. $2,000. a. zero. b. $4,000. c. $5,000. d. $2,000.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS