Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000. How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) a. Both distributions are in cash. The first was paid on June 15, 2019, and the second was paid on November 15, 2019.
Last year, Miley decided to terminate the S corporation election of her solely owned corporation on October 17, 2018 (effective immediately), in preparation for taking it public. At the time of the election, the corporation had an accumulated adjustments account balance of $189,000 and $482,500 of accumulated E&P from prior C corporation years, and Miley had a basis in her S corporation stock of $164,250. During 2019, Miley’s corporation reported $0 taxable income or loss. Also, during 2019 the corporation made distributions to Miley of $99,500 and $73,000.
How are these distributions taxed to Miley assuming the following? (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.)
a. Both distributions are in cash. The first was paid on June 15, 2019, and the second was paid on November 15, 2019.
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