How is Kathy taxed on the distribution

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Question - Gray Inc., an electing S corporation, holds $5,000 of AEP and $8,000 in AAA at the beginning of the calendar tax year. Kathy and John each own 50% of Gray Inc. Gray's taxable income is $6,000 for the year. Gray distributes $6,000 to each shareholder on April 1, and it distributes another $3,000 to each shareholder on July 1. How is Kathy taxed on the distribution?

Reference no: EM132969034

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