During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct? a. Nutt recognizes a $1,000 LTCG. b. Nutt's stock basis is $2,000. c. Nutt's ordinary income is $15,000. d. Nutt's tax-free return of capital is $11,000.'
During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct? a. Nutt recognizes a $1,000 LTCG. b. Nutt's stock basis is $2,000. c. Nutt's ordinary income is $15,000. d. Nutt's tax-free return of capital is $11,000.'
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter15: S Corporations
Section: Chapter Questions
Problem 2CE
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Transcribed Image Text:During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a
distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation
earned $11,000 ordinary income during the year. It has no accumulated E & P. Which
statement is correct?
a. Nutt recognizes a $1,000 LTCG.
b. Nutt's stock basis is $2,000.
c. Nutt's ordinary income is $15,000.
d. Nutt's tax-free return of capital is $11,000.'
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