Drop down options are A. 1. a capital gain/ ordinary income 2. all of it passes through to Jamari/ a proportionate share of it passes through to the shareholders.

B. 1. increase/decrease

I don't know who Jamari is or what AAA is. This is the only information I have for this question.

Exercise 22-21 (a) (LO. 7) Khomenko, Inc., an S corporation for nine years, distributes a tract of land held as an investment to Bernard, its majority shareholder. The land was purchased for $155,000 twelve years ago and is currently worth $450,000. If an amount is zero, enter, "O". of $ which is reported on Schedule K, and a. As a result of the distribution, Khomenko recognizes . In addition, the AAA is increased by $ b. Then the property distribution reduces the AAA by $ . Therefore, the net effect on AAA is a $ c. If the land had been purchased for $450,000 and was currently worth $155,000, Bernard recognizes a loss s and the net effect on Khomenko's AAA is s . Bernard would take a s basis in the land