1. Wiggins is the sole shareholder of the Tamale Corporation, a calendar-year S corporation. Tamale is indebted to Wiggins in the amount of $5,000. For the current year, Tamale earned $25,000 of ordinary income and distributed $10,000 as a dividend to Wiggins. How much income should Wiggins report from Tamale Corporation for the current year?

A.		$0
B.	$10,000

C.		$25,000
D.	$35,000

2. JLK Corporation was formed in 1981 and elected a calendar tax year. It elected S corporation status in 1982. On December 31 of the current year, JLK made a $50,000 distribution to its founder and sole shareholder, John. JLK had a previously taxed income account of $9,000 and $1,000 of accumulated earnings and profits at the time of the distribution. The accumulated E&P was earned in 1980 while a C corporation. The accumulated adjustments account balance on January 1 of the current year was zero. During the year, JLK earned $12,000 of ordinary income. Johns basis in his JLK stock on January 1 of the current year was $10,000. How much income will John report from this S corporation investment in the current year, and what is its character?

Ordinary Income

Capital Gain

A. $12,000

$0

B.

$13,000

$0

C.

$50,000

$10,000

D.

$13,000

$27,000

[ 3 ] Naples Corporation, an S corporation, made a $10,000 cash distribution to its sole shareholder, Jimmy, in the current year. Jimmys basis in the Naples stock at the beginning of the year was $50,000. In the current year, Naples incurred a $60,000 loss. What amount of the cash distribution is taxable to Jimmy in the current year?

A.		$20,000
B.	$10,000

C.	$2,500
D.		$0