Ken is the sole shareholder in Senseonics, Inc., an S corporation. At the beginning of 2010, Senseonics had Accumulated Adjustments Account (AAA) of $150,000 and Accumulated Earnings and Profits (AEP) of $80,000. Ken’s basis in his S corp stock was $160,000 at the beginning of 2010. During 2010, the corporation had operating income of $600,000 and a Long-Term Capital Losses (LTCL) of $30,000. Ken received a distribution of $800,000. What are the tax implications to Ken from his ownership of Senseonics? (i.e. What items will be subject to tax?) Include the amount and character of the taxable item (e.g. ordinary income, dividend, capital gain, etc.). What are the ending balances in AAA, AEP and Ken’s stock basis?
Ken is the sole shareholder in Senseonics, Inc., an S corporation. At the beginning of 2010, Senseonics had Accumulated Adjustments Account (AAA) of $150,000 and
- What are the tax implications to Ken from his ownership of Senseonics? (i.e. What items will be subject to tax?) Include the amount and character of the taxable item (e.g. ordinary income, dividend,
capital gain , etc.). - What are the ending balances in AAA, AEP and Ken’s stock basis?
Basis in Stock:
The basis in stock is, by and large, how much is the capital interest in property for charge purposes. As a rule, the basis of a stock is the cost of acquisition for the investor. The basis in stock is used to figure deterioration, amortization, consumption, setback misfortunes, and any addition or misfortune to the deal, trade, or other attitude of the property.
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