Clampett, Inc. (an S corporation) previously operated as a C corporation. Under general rules, distributions from Clampett, Inc. are deemed to be paid in the following order:
A) shareholder's remaining stock basis, prior C corporation earnings and profit, the AAA account.
B) shareholder's remaining stock basis, the AAA account, prior C corporation earnings and profit.
C) prior C corporation earnings and profit, the AAA account, shareholder's remaining stock basis.
D)the AAA account, prior C corporation earnings and profit, shareholder's remaining stock basis.
E)None of these

Question

Quizplus · Accepted Answer

Distributions from an S corporation that was previously a C corporation are generally paid in the order of the Accumulated Adjustments Account (AAA), prior C corporation earnings and profits, and then the shareholder's remaining stock basis.