Determine the items of taxable income

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Reference no: EM133291523

In 2019, Mara elected to convert her C-corporation to an S-corporation. Mara is the sole shareholder. At the beginning of 2022, Mara had a stock basis of $650,000, an accumulated adjustments account (AAA) balance of $162,500, and accumulated earnings and profits of $266,500.

The following information is included on Mara's 2022 k-1: $130,000 of non-separately stated income and an $8,000 long-term capital loss. Mara also received a $350,000 distribution.

1. What are Mara's ending balances in AAA, AEP? What is Mara's ending basis in her S corporation stock?

2. What are the tax consequences in 2022 to Mara from her ownership of this S corporation? Be specific-i.e. what is the amount and character of any income, gain or loss that would pass through and appear on Mara's 1040 return? Note: you do NOT need to calculate the amount of tax-just determine the items of taxable income.

Reference no: EM133291523

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