Hazel Is the Sole Shareholder of Maple Corporation in 2020

question 94

Essay

Hazel is the sole shareholder of Maple Corporation In 2020 Maple operated as a C corporation and reported $15,100 of taxable income (and earnings and profits). On January 1, 2021, Maple elected S corporation status. During 2021 Maple reported $12,100 of ordinary business income and no separately stated items. It also distributed $25,100 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 $5,100?

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Definitions:

Preoperational

A stage in Piaget's theory of cognitive development, typically from ages 2 to 7, where children start to engage in symbolic play but lack the ability to perform operations or mental manipulations.

Equilibrate

The process of achieving balance or stability within a system, particularly in the context of cognitive development as described by Jean Piaget.

Piaget

A psychologist known for his theory of cognitive development that describes how children's intellect grows through stages.