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Collette's S corporation holds a small amount of accumulated earnings and profits (AEP), requiring the use of a more complex set of distribution rules. Collette's

Collette's S corporation holds a small amount of accumulated earnings and profits (AEP), requiring the use of a more complex set of distribution rules. Collette's accountant tells her that this AEP forces the maintanence of the AAA figure each year. Discuss the issues that arise with respect to the distributions when an S corporation holds AEP.

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