Beta Corporation, an S corporation with one shareholder, incurred the following items Year 1 Ordinary loss ($40,000) Year 2 Ordinary income $27,000 Cash distribution 10,000 Year 3 Ordinary income $22,000 Cash distribution 17,000 At the beginning of Year 1, the shareholders stock basis was $20,000, ...

a Items Reported by Shareholder a Net increase is 13000 27000 ordinary income 10000 distribution 400 ...

Beta Corporation, an S corporation with one shareholder, incurred the following items: Year 1 Ordinary loss ($40,000)

Question:

Beta an S with one shareholder, incurred the following items:
Year 1
Ordinary loss ……………………………($40,000)
Year 2
Ordinary income ………………………..$27,000
Cash ……………………….. 10,000
Year 3
Ordinary income ……………………….$22,000
Cash ………………………. 17,000
At the beginning of Year 1, the shareholder’s stock basis was $20,000, and her debt basis was $16,000.
a. Assuming the has no accumulated E&P, show items reported by the shareholder in each year, show all basis adjustments to stock and debt, and show the stock and debt bases at the end of each year.
b. Redo Part a for Year 2 and Year 3 assuming ordinary income in Year 2 is $8,000 instead of $27,000.
c. Go back to the original facts and again redo Part a for all years assuming that, at the beginning of Year 1, the had a AAA balance of zero and accumulated E&P of $12,000. Corporation
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