Clampett, Incorporated, has been an S corporation since its inception. On July 15, 2021, Clampett, Incorporated, distributed $54,500 to J.D. His basis in his Clampett, Incorporated, stock on January 1, 2021, was $30,900. For 2021, J.D. was allocated $10,450 of ordinary income from Clampett, Incorporated, and no separately stated items. How much capital gain does J.D. recognize related to Clampett, Incorporated, in 2021?

Question

Quizplus · Accepted Answer

J.D.'s ending basis in his Clampett, Incorporated, stock is $30,900 + $10,450 - $54,500 = $-13,150 (negative because the distribution exceeded his basis). Therefore, J.D. recognizes a capital gain of $13,150 on the distribution.

Clampett, Incorporated, Has Been an S Corporation Since Its Inception