QUESTION 8

1. Lewis, Inc. is a calendar year S-Corporation who made distributions to its shareholders. Which of the following is correct?

   		Distributions from the OAA of an S-corp are NOT taxable and do NOT reduce the shareholder's basis in their stock.
   		Distributions from AAA of an S-corp are taxable to the recipient and reduce the shareholder's stock basis.
   		Distributions from the AEP of an S-corp are taxable as dividends to the recipient and reduce the shareholder's stock basis.
   		Distributions from the AEP of an S-corp are taxable as dividends to the recipient and do NOT reduce the shareholder's stock basis.