During 2015,Miles Nutt,the sole shareholder of a calendar year S corporation,received a distribution of $16,000.On December 31,2014,his stock basis was $4,000.The corporation earned $11,000 ordinary income during the year.It has no accumulated E & P.Which statement is correct?
A) Nutt recognizes a $1,000 LTCG.
B) Nutt's stock basis will be $2,000.
C) Nutt's ordinary income is $15,000.
D) Nutt's tax-free return of capital is $11,000.
E) None of the above.
Correct Answer:
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