Samuel is the sole shareholder of Small, Inc. (an S-corporation). Small, Inc. elected S-Corporation status...
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Samuel is the sole shareholder of Small, Inc. (an S-corporation). Small, Inc. elected S-Corporation status in 2015 after 10 years of operation as a C-corporation. As of December 31, 2020, Small, Inc. had a positive balance in AEP (accumulated earnings and profits) of $15,000 and a positive balance in AAA (accumulated adjustments account) of $10,000. On January 1, 2021, Small, Inc. distributed property to Samuel with a fair market value of $80,000 and an adjusted basis of $20,000. Samuels stock basis in Small, Inc. (prior to the distribution) was $160,000. Samuel is in the 37% tax bracket and does not have any capital gain or losses.
Determine the tax consequences to Samuel from this distribution
What is Samuels ending stock basis?
What are the tax consequences to Small, Inc. in making this distribution to Samuel?
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