Identify which of the following statements isfalse.

A) ThePTI (previously taxed income) represents the balance of undistributed net income which were already taxed.

B) Tax exempt income increase the AAAandthe basis of the S corporation stock.

C) The AAA balance can be negative, but the shareholder's basis in the S corporation stock cannot be less than zero.

D) An S Corporationmay or may nothaveaccumulatedEarnings and Profits.