During the Year, Miles Nutt, the Sole Shareholder of a Calendar

question 19

Multiple Choice

During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct?

• A) Nutt recognizes a $1,000 LTCG.
• B) Nutt's stock basis is $2,000.
• C) Nutt's ordinary income is $15,000.
• D) Nutt's tax-free return of capital is $11,000.

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Definitions:

Comparative Statements

Comparative statements are financial statements that provide data for multiple periods side by side, allowing for easy comparison and analysis of performance over time.

Successive Accounting Periods

Consecutive time frames for which a business or organization reports financial information, usually quarterly or annually.

Period-to-period Statements

Comparative financial reports that show changes in a company's financial position over successive periods.

Revenue Trend Percent

A metric that measures the rate of change in a company's revenue over a specific period, helping to understand growth patterns.