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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