Lamont is a 100percent owner of JKL Corporation. JKL has been an S corporation since its inception in 2020. During 2021, JKL distributed $21,800 to Lamont. During 2021, JKL reported $6,800 of business income and no separately stated items. What is the amount and character of the gain on the distribution, if any, that Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2021 in each of the following scenarios?
a. Lamont's stock basis at the beginning of 2021 was $30,900.
b. Lamont's stock basis at the beginning of 2021 was $4,180.

Question

Quizplus · Accepted Answer

The Answer of Lamont is a 100percent owner of JKL Corporation. JKL has been an S corporation since its inception in 2020. During 2021, JKL distributed $21,800 to Lamont. During 2021, JKL reported $6,800 of business income and no separately stated items. What is the amount and character of the gain on the distribution, if any, that Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2021 in each of the following scenarios?
a. Lamont's stock basis at the beginning of 2021 was $30,900.
b. Lamont's stock basis at the beginning of 2021 was $4,180.

Lamont Is a 100percent Owner of JKL Corporation