Carlota and Dave formed an S corporation; Carlota owns 75% of the out-standing shares, and Dave owns the rest. When the entity's AAA balance is $1,000,000, it distributes an asset to each shareholder; the basis of each asset to the corporation is $197 500 Carlota's asset is worth $276,500, and Dave's is worth $237,000. a. How much gain, if any, does the the corporation recognize as a result of the distribution? $ 54250 b. By how much, if any, does the distribution increase Dave's gross income? $

Carlota and Dave formed an S corporation; Carlota owns 75% of the out-standing shares, and Dave owns the rest. When the entity's AAA balance is $1,000,000, it distributes an asset to each shareholder; the basis of each asset to the corporation is $197 500 Carlota's asset is worth $276,500, and Dave's is worth $237,000. a. How much gain, if any, does the the corporation recognize as a result of the distribution? $ 54250 b. By how much, if any, does the distribution increase Dave's gross income? $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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