Tall Corporation (an S-corporation) has AAA of $16,000 and AEP of $8,000 .Tall Corp. distributes $20,000 of cash to its Henry, the sole shareholder. Henry's basis in his S Corp stock before the distribution is $40,000. Henry is in the 37% tax bracket. 1. What are the tax consequences to Henry as a result of this distribution? 2. What is ending balance in AAA and AEP. What is Henry's ending stock basis?
Tall Corporation (an S-corporation) has AAA of $16,000 and AEP of $8,000 .Tall Corp. distributes $20,000 of cash to its Henry, the sole shareholder. Henry's basis in his S Corp stock before the distribution is $40,000. Henry is in the 37% tax bracket. 1. What are the tax consequences to Henry as a result of this distribution? 2. What is ending balance in AAA and AEP. What is Henry's ending stock basis?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 51P
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![Tall Corporation (an S-corporation) has
AAA of $16,000 and AEP of $8,000 .Tall
Corp. distributes $20,000 of cash to its
Henry, the sole shareholder. Henry's basis
in his S Corp stock before the distribution
is $40,000. Henry is in the 37% tax
bracket.
1. What are the tax consequences to
Henry as a result of this distribution?
2. What is ending balance in AAA and
AEP. What is Henry's ending stock basis?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe4242909-816a-4b6d-8942-196ad438e1e5%2F9833a5f7-afc5-4b06-b744-40951681c01a%2Fb90zwk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Tall Corporation (an S-corporation) has
AAA of $16,000 and AEP of $8,000 .Tall
Corp. distributes $20,000 of cash to its
Henry, the sole shareholder. Henry's basis
in his S Corp stock before the distribution
is $40,000. Henry is in the 37% tax
bracket.
1. What are the tax consequences to
Henry as a result of this distribution?
2. What is ending balance in AAA and
AEP. What is Henry's ending stock basis?
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