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What is the tax treatment of the cash distribution

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Reference no: EM132977914

Question - Jenn is the sole shareholder of Sunnytime, Inc. Sunnytime Sunnytime Sunnytime, which elected into Subchapter S using Form 2553 in 2009. Jenn's basis in her shares of  stock was $82,000 on January 1st. During the tax year,  distributed $154,000 of cash to Jenn.  also reported the following items:

Ordinary income for current year $75,000

Accumulated Adjustments Account as of January 1 $52,000

Accumulated Earnings and Profits as of January 1 $66,000

What is the tax treatment of the cash distribution? Specifically, determine the (1) ending balance of the Accumulated Adjustments Account, (2) ending balance of Accumulated Earnings and Profits, (3) post-distribution stock basis, (4) amount of any taxable dividends, and (5) amount of any capital gains.

Reference no: EM132977914

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