Please answer the questions in your own words. Copying and pasting from the textbook, Internet sites, or from any other written material is not appropriate. Also, please show your calculation.

Question #3.

R, an individual, is the sole shareholder of an S corporation. The S corporation was once a C corporation and still has $300 in accumulated earnings and profits. R has a tax basis in his S corporation stock of $400. The S corporations AAA balance is $250. The S corporation has an OAA balance of $0. The S corporation distributes $1,000 in cash to R in a nonliquidating distribution. Please answer the following questions:

a. How much dividend income does R recognize as a result of the distribution?

b. What is the S corporations balance in the AAA after the distribution?

c. What is Rs stock basis after the distribution?

d. How much capital gain does R recognize as a result of the distribution?