A calendar year S Corporation has $85,000 accumulated earnings and profits. Picard, the sole shareholder, has an adjusted basis of $75,000 in his stock with zero in accumulated adjustments account. If a $90,000 cash distribution is made, determine the tax aspects.

There is a dividend to Picard in the amount of:

	a.	a. $90,000
	b.	b. $85,000
	c.	c. $75,000
	d.	d. 0
	e.	e. None of the above

1. There is a non-taxable return of basis in stock to Picard of:

   	a.	a. $90,000
   	b.	b. $75,000
   	c.	c. $5,000
   	d.	d. 0
   	e.	e. None of the above

1. The tax consequences to the corporation are:

   	a.	a. No gain to the corporation on the distribution
   	b.	b. Pass-through of gain or loss to Picard
   	c.	c. Reduction of AAA account
   	d.	d. 2 of the above
   	e.	e. None of the above

If this corporation had 10,000 of AAA, the $90,000 cash distribution would be:

	a.	a. A dividend first
	b.	b. Out of AAA first
	c.	c. Out of stock basis remaining outside of AAA first
	d.	d. None of the above.