1. On January 2, 2019, David loans his S corporation $10,000. By the end of 2019 Davids stock basis is zero and the basis in his note has been reduced to $8,000. During 2020, the companys operating income is $10,000. The company makes 2020 distributions to David of $11,000. David reports a: a. $1,000 LTCG. b. $3,000 LTCG. c. $11,000 LTCG. d. Loan basis of $10,000.

2. If an S corporations beginning balance in OAA is $15,000, and the following transactions occur, what is the ending OAA balance? Depreciation recapture income $21,000 Payroll tax penalty 4,200 Tax-exempt interest income 5,300 Nontaxable life insurance proceeds 5,100 Life insurance premiums paid (nondeductible) 2,800 a. $1,300 b. $7,600 c. $23,300 d. $27,500 e. None of the above

3. During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $20,000. At the end of last year, his stock basis was $4,000. The corporation earned $12,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct? a. Nutts stock basis is $2,000. b. Nutt recognizes a $4,000 LTCG. c. Nutts ordinary income is $15,000. d. Nutts tax-free return of capital is $11,000.

4. Amit, Inc., an S corporation, holds a AAA balance of $614,000 at the beginning of the tax year. During the year, the following items occur. Operating income $501,000 Interest income 6,500 Dividend income 13,020 Municipal bond interest income 6,000 Long-term capital loss from sale of investment land 7,400 Section 179 depreciation deduction 6,000 Charitable contributions 19,000 Cash distributions 57,000 Amits ending AAA balance is: a. $1,055,620. b. $1,185,150. c. $1,045,120. d. $1,242,150. e. Some other amount.