Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $20,000, Holbrook's AAA balance is $8,000, and Holbrook holds $2,500 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $15,000 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0". Beginning stock basis From AAA account From AEP account From Cody's stock basis Ending stock basis $ $ $ $ Basis in Stock $20,000 8,000 2,500 X $ 4,500 Distribution from Account 5,000 X -8,000 0 -4,500 X Effect on Stock Basis 0 X 7,500 X

Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody's basis in his stock is $20,000, Holbrook's AAA balance is $8,000, and Holbrook holds $2,500 AEP before the distribution. According to the distribution ordering rules, complete the chart below to indicate how much of the $15,000 is from AAA and AEP as well as how Cody's stock basis is affected. If an amount is zero, enter "0". Beginning stock basis From AAA account From AEP account From Cody's stock basis Ending stock basis $ $ $ $ Basis in Stock $20,000 8,000 2,500 X $ 4,500 Distribution from Account 5,000 X -8,000 0 -4,500 X Effect on Stock Basis 0 X 7,500 X

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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