Tonya is the 100% shareholder of a corporation established five years ago.It has always been an S corporation.After adjustment for this year's corporate income,but before taking distributions into account,Tonya has a $50,000 stock basis.The corporation pays Tonya a $60,000 cash distribution.As a result of this distribution,Tonya will have an ending stock basis and recognized income of

Question

Quizplus · Accepted Answer

D) Tonya's distribution is return of capital up to the level of her stock basis so the first $50,000 of the distribution is not taxable and reduces her stock basis to $0, but the excess $10,000 is taxable.

Tonya Is the 100% Shareholder of a Corporation Established Five