Ari is the sole shareholder in Soccer, Inc., a calendar-year corporation. After operating as a C corporation for 5 years, Soccer, Inc., elected S corporation status in 2016. At the beginning of 2022, Ari had a stock basis in Soccer of $100,000, an accumulated adjustments account (AAA) balance of $25,000, and accumulated earnings and profits of $15,000. On December 31, 2022, Ari receives a $50,000 distribution. Per his k-1 from Soccer, Inc., Ari has a $4,000 long-term capital gain and $10,000 of non-separately stated income.

a. Determine Aris ending balance in AAA, AEP and stock basis.

b. How much income, gain or loss with Ari have as a result of his interest in Soccer, Inc.? Be specific.

c. Ari said, Im so happy that converted from being a C-corporation to an S-corporation since I know that I can get the $50,000 cash out of the business without tax. During the C corp. days, the $50,000 would have been subject to a 21% tax. How would you respond to Ari?