Hector formed H Corporation as a C corporation at the beginning of 2019.Hector was the sole shareholder of H Corporation.H Corporation reported 2019 taxable income (and earnings and profits)of $200,000.At the beginning of 2020, H Corporation elected S corporation status.During 2020, H Corporation had a rough year, reporting an ordinary business loss of $70,000, $4,000 of dividend income, and $3,000 of interest income.H Corporation also distributed $15,000 to Hector.What is the amount and character of gain/income Hector must recognize on the distribution (if any)? What is the balance in H Corporation's accumulated adjustments account (AAA)at the end of 2020?

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The Answer of Hector formed H Corporation as a C corporation at the beginning of 2019.Hector was the sole shareholder of H Corporation.H Corporation reported 2019 taxable income (and earnings and profits)of $200,000.At the beginning of 2020, H Corporation elected S corporation status.During 2020, H Corporation had a rough year, reporting an ordinary business loss of $70,000, $4,000 of dividend income, and $3,000 of interest income.H Corporation also distributed $15,000 to Hector.What is the amount and character of gain/income Hector must recognize on the distribution (if any)? What is the balance in H Corporation's accumulated adjustments account (AAA)at the end of 2020?

Hector Formed H Corporation as a C Corporation at the Beginning