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Determine the tax aspects

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Problem - McLin, Inc., is a calendar year S corporation. Its AAA balance is zero.

a. McLin holds $90,000 of AEP. Tobias, the sole shareholder, has an adjusted basis of $80,000 in his stock. Determine the tax aspects if a $90,000 salary is paid to Tobias. Ignore the 20% QBID.

b. Same as part (a), except that McLin pays Tobias a $90,000 cash distribution from AEP.

Reference no: EM132663481

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