During 2011, Ms

question 37

Essay

During 2011, Ms. Rasic, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2010, Ms. Rasic's stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. Calculate the amount and type of income Ms. Rasic recognizes in 2011, assuming there is no C corporation AEP.

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Definitions:

Fair Value

The price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Cash Consideration

The total amount of cash that is paid or received during a transaction, such as buying an asset or settling a liability.

Net Realisable Value

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Relevant Exchange Rates

Exchange rates that are applied to convert foreign currencies into the reporting currency, crucial for accurately recording transactions in financial statements.