Lamont is a 100% owner of JKL Corporation. JKL has been an S corporation since its inception in 2016. During 2017, JKL distributed $20,000 to Lamont. During 2017, JKL reported $5,000 of business income and no separately stated items. What is the amount and character of the gain on the distribution, if any, Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2017 in each of the following scenarios?
a. Lamont's stock basis at the beginning of 2017 was $30,000.
b. Lamont's stock basis at the beginning of 2017 was $4,000.
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