Does your answer to question 1 change meaning if there are

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Meesha Barten is Treasurer, and owns 2.1%, of Itheenk Eimhott Corporation (IEC), an S-corporation that banks at Bank of America. Assume Meesha never contributed any capital into IEC and is not paid any salary. On December 31, 2007, Meesha, who as an IEC ATM card, withdraws $20,000 from IEC's checking account, leaving a checking account balance of $980,000.

Question (1): are there any tax consequences for this withdrawal if this is IEC's first year in business and has a $100,000 net loss? If so, how would this be reported on Meesha's tax return?

Question (2): does your answer to question (1) change if Meesha's share of IEC's net profit is $500,000 since IEC's inception in 2003?

Question (3): does your answer to question (1) change (meaning if there are any tax consequences on Meesha) if IEC's first year in business earned a $10,000,000 net profit? Are there any other issues to consider under these circumstances?

Reference no: EM13596342

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