A is an S corporation that had C corporation earnings and profits in the amount of $31,000 as of the S election date. At the end of Year 3, A had an accumulated adjustments account (AAA) balance of $53,000, and a other adjustments account (OAA) Balance of $8,000. At the end of the year, A made a distribution to Steve, its only shareholder. The distribution consisted of land with a fair market value (FMV) and adjusted basis of $150,000. Assume Steves basis in the corporate stock was $70,000 after any Year 3 income items and before any distributions.

Respond to the following questions. If the appropriate response is zero, enter a zero (0).

1. What amount of the distribution is tax free to Steve as a distribution of S corporation

   earnings?

2. What amount of the distribution is a taxable dividend to Steve?

3. What amount, if any, of taxable capital gain does Steve recognize in year 3?