Clampett, Inc. has been an S corporation since its inception. On July 15, 2019, Clampett, Inc. distributed $50,000 to J. D. His basis in his Clampett, Inc.
Stock on January 1, 2019, was $30,000. For 2019, J. D. was allocated $10,000 of ordinary income from Clampett, Inc. and no separately stated items. What is the amount of income J. D. recognizes related to Clampett, Inc. in 2019?

Question

Quizplus · Accepted Answer

$10,000 share of ordinary income + $10,000 capital gain from distribution in excess of basis ($50,000 distribution − $30,000 basis − $10,000 increase in basis from distributive share of ordinary income).