Oak Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, Glover, and has always operated as a C corporation. However, at the beginning of this year, Glover made a qualifying S election for Oak Corp., effective January 1. Oak Corp. did not have any C corporation earnings and profits on that date. On June 1, Oak Corp. distributed $15,000 to Glover. What is the amount and character of gain Glover must recognize on the distribution, and what is his basis in his Oak Corp. stock in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.)

8.

value: 1.00 points

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a. At the time of the distribution, Glovers basis in his Oak Corp. stock was $35,000.

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ProblemDifficulty: 2 MediumLearning Objective: 22-05 Apply the tax rules for S corporation operating distributions and liquidating distributions.

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9.

value: 1.00 points

Required information

b. At the time of the distribution, Glovers basis in his Oak Corp. stock was $8,000.

References

eBook & Resources

ProblemDifficulty: 2 MediumLearning Objective: 22-05 Apply the tax rules for S corporation operating distributions and liquidating distributions.

Check my work

10.

value: 1.00 points

Required information

c. At the time of the distribution, Glovers basis in his Oak Corp. stock was $0.