Hazel Is the Sole Shareholder of Maple Corp

question 114

Essay

Hazel is the sole shareholder of Maple Corp.In 2019 Maple operated as a C corporation and reported $15,000 of taxable income (and earnings and profits).In 2019, Maple elected S corporation status.During 2020 Maple reported $12,000 of ordinary business income and no separately stated items.It also distributed $25,000 to Hazel.What is the amount and character of income Hazel must recognize on the distribution? What is Hazel's stock basis at the end of 2020 (after accounting for the distribution)if her basis at the beginning of the year was $5,000?

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Definitions:

Demographic Trends

Patterns and changes in the characteristics of human populations, such as age, race, or gender, that can influence societal structures and markets.

SWOT Analysis

An instrument for planning strategies that detects the Strengths, Weaknesses, Opportunities, and Threats involved in business competition or the planning of a project.

External Analysis

The process of evaluating an organization's external environment to identify opportunities and threats that could impact its strategy and operations.

Environmental Scanning

The process businesses use to understand the external factors influencing their operation, including technological, regulatory, and competitive elements.