Lamont is a 100% owner of JKL Corporation. JKL has been an S corporation since its inception in 2014. During 2016, JKL distributed $20,000 to Lamont. During 2016, JKL reported $5,000 of business income and no separately stated items. What is the amount and character of the gain, if any, Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2016 in each of the following scenarios?
a. Lamont's stock basis at the beginning of the year was $30,000.
b. Lamont's stock basis at the beginning of the year was $4,000.

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The Answer of Lamont is a 100% owner of JKL Corporation. JKL has been an S corporation since its inception in 2014. During 2016, JKL distributed $20,000 to Lamont. During 2016, JKL reported $5,000 of business income and no separately stated items. What is the amount and character of the gain, if any, Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2016 in each of the following scenarios?
a. Lamont's stock basis at the beginning of the year was $30,000.
b. Lamont's stock basis at the beginning of the year was $4,000.

Lamont Is a 100% Owner of JKL Corporation