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Tiger Inc., a calendar year S Corporation, is owned solely by David. Tiger owns investment...

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Accounting

Tiger Inc., a calendar year S Corporation, is owned solely by David. Tiger owns investment land that was purchased for $160,000 four years ago. At the end of the tax year, the land is distributed to David at a time when the land is worth $240,000. Davids basis in Tiger stock is $230,000. The AAA balance at the beginning of the year is $150,000.

a. What effect does the distribution have on Tiger and the AAA?

b. What effect does the distribution have on Davids stock basis?

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