S Corporation Taxation

Cameron is a shareholder in a calendar-year S corporation. On January 1, 2020, Camerons stock basis is $30,000, his share of the accumulated adjustments account (AAA) is $8,000, and his share of corporate accumulated earnings and profits (AEP) is $20,000. His share of the S corporations 2020 long-term capital gain is $14,000. His share of the S-corporations operating loss is $8,000. Cameron received a $22,000 distribution from the S corporation on December 31, 2020.

1.Determine the ending balance that Cameron has in his stock basis, AEP and AAA

2. Determine income, gain, and/or loss that Cameron will show on his 2020 1040 return.

3.

Assume that rather than receiving a $22,000 cash distribution, Cameron receives an asset with a fair market value of $22,000 and a basis to the S Corporation of $10,000. Assume that Cameron holds 100% of the S corporation shares.

Based on this information, what are the tax implications of this distribution to the S corporation and to Cameron?