Last year, Boone decided to terminate the S corporation election of his solely owned corporation in preparation for taking the company public At the time, the corporation had AAA of $200,000 and $450,000 of accumulated E P from prior C corporation years Boone had a basis in his S corporation stock of $200,000 During 2017, the firm reported $0 taxable income loss and made distributions of $75,000 cash and $100,000 cash to Boone Boone terminated his S election effective June 30, 2016 The distributions were paid on September 1, 2017 and September 16th, 2017 How will the two distributions be taxed (i e dividend, tax free return of capital, or capital gain) Instead, assume Boone terminated his S election effective September 30, 2016 The distributions were paid on September 1st, 2017 and September 16 th , 2017 How will the distributions be taxed (i e dividend, tax free return of capital, or capital gain) Instead, assume Boone terminated his S election effective September 30, 2016 The distributions were paid on September 1 st , 2017 and September 16 th , 2017 The September 16 th distribution was a property (non cash) distribution (FMV and AB were both $100,000) rather than a cash distribution How will the distributions be taxed (i e dividend, tax free return of capital, or capital gain)

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Posted on Jul 12, 2024

Last year, Boone decided to terminate the S corporation election of his solely owned corporation in preparation for taking the company public. At the time, the corporation had AAA of $200,000 and $450,000 of accumulated E&P from prior C corporation years. Boone had a basis in his S corporation stock of $200,000. During 2017, the firm reported $0 taxable income/loss and made distributions of $75,000 cash and $100,000 cash to Boone.

Boone terminated his S election effective June 30, 2016. The distributions were paid on September 1, 2017 and September 16th, 2017. How will the two distributions be taxed (i.e. dividend, tax free return of capital, or capital gain)?
Instead, assume Boone terminated his S election effective September 30, 2016. The distributions were paid on September 1st, 2017 and September 16^th, 2017. How will the distributions be taxed (i.e. dividend, tax free return of capital, or capital gain)?
Instead, assume Boone terminated his S election effective September 30, 2016. The distributions were paid on September 1^st, 2017 and September 16^th, 2017. The September 16^th distribution was a property (non-cash) distribution (FMV and AB were both $100,000) rather than a cash distribution. How will the distributions be taxed (i.e. dividend, tax free return of capital, or capital gain)?