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Hazel Is the Sole Shareholder of Maple Corporation in 2020

question 44

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Hazel is the sole shareholder of Maple Corporation In 2020 Maple operated as a C Corporation and reported $15,000 of taxable income (and earnings and profits). On January 1, 2021, Maple elected S Corporation status. During 2021 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 2021 (after accounting for the distribution)if her basis at the beginning of the year was $5,000?


Definitions:

Self-Monitoring

The awareness and regulation of one's behavior in accordance with the social situations and norms.

Social Cues

Nonverbal gestures, expressions, or behaviors that communicate information or influence interactions in social settings.

Self-Efficacy

An individual's belief in their own capability to perform actions and achieve goals, influencing their motivation and behavior.

Dispositions

The inherent qualities of mind and character that influence an individual's behavior and attitudes.

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