QUESTION 8

Evelyn receives a distribution of $85,000 from Monica Corporation, an S Corporation, in which she is the sole (one hundred percent (100%)) shareholder. Monica Corporation has an Accumulated Adjustments Account (AAA) of $25,500 and Accumulated Earnings And Profits (AEP) of $3,000. Evelyn's basis in her stock in Monica Corporation is $26,000. The amount of Ordinary Income (Dividends) recognized by Evelyn as a result of this distribution is $3,000.

True or False