Zebra Corporation Has Always Been an S Corporation and Is

question 91

Essay

Zebra Corporation has always been an S corporation and is 100% owned by Paul. Paul has a basis of $40,000 in his Zebra stock at the beginning of the year. During the year, Zebra has an ordinary loss of $20,000 and a long-term capital gain of $10,000. In addition, Zebra Corporation distributed $55,000 in cash to Paul on December 1. Will the distribution cause Paul to recognize a gain? If so, what are its amount and character?

---

Definitions:

Ecological Opportunities

Situations where organisms can exploit new resources or niches, often leading to adaptive evolution or speciation.

Ancestral Organism

The original form from which a species or group of species evolved.

Macroevolution

Large-scale evolutionary changes that occur over geologic time, leading to the emergence of new species and broader taxonomic groups.

Microevolution

Change in the genetic makeup of a species or a small group of organisms over a brief time period, regarded as evolutionary.