Assume that at the end of 2020, Clampett, Incorporated (an S corporation) distributes property (fair market value of $59,500, basis of $11,500) to each of its four equal shareholders (aggregate distribution of $238,000). At the time of the distribution, Clampett, Incorporated, has no corporate earnings and profits and J.D. has a basis of $52,600 in his Clampett, Incorporated, stock. How much total income does J.D. recognize as a result of the distribution?

Question

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J.D. recognizes income to the extent the distribution exceeds his stock basis. The distribution to J.D. is $59,500, and his stock basis is $52,600, so he recognizes $6,900 as income.

Assume That at the End of 2020, Clampett, Incorporated (An