During the year, Mike, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned a $11,000 ordinary income during the year. It holds a zero balance in accumulated E&P. Which statements is correct? Mike's ordinary income is $15,000. Mike recognizes a $1,000 LTCG. Mike's tax-free return of capital is $11,000. O Mike's stock basis is $2,000.

During the year, Mike, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned a $11,000 ordinary income during the year. It holds a zero balance in accumulated E\&P. Which statements is correct? Mike's ordinary income is $15,000. Mike recognizes a $1,000 LTCG. Mike's tax-free return of capital is $11,000. Mike's stock basis is $2,000