Ryan is the sole shareholder of Sweetwater Apartments, an S corporation in Sour Lake, Texas. At a time when his stock basis is $10,000, the corporation distributes appreciated property worth $100,000 (basis of $10,000). There is no built-in gain. Ryan's taxable gain is:

Question

Quizplus · Accepted Answer

When a shareholder receives a distribution of property from an S corporation, the shareholder's taxable gain is calculated as the excess of the fair market value of the property over the shareholder's stock basis. In this case, Ryan's taxable gain is $90,000 ($100,000 FMV - $10,000 basis). Therefore, choice C is the correct answer.

Ryan Is the Sole Shareholder of Sweetwater Apartments, an S