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SAB Corp., a Delaware corporation, lost an accumulated $100,000 prior to 2023. In 2023, it earned $50,000 in profits. To reward shareholders, the board of
SAB Corp., a Delaware corporation, lost an accumulated $100,000 prior to 2023. In 2023, it earned $50,000 in profits. To reward shareholders, the board of directors declared and paid a $1 distribution per share to each of its shareholders ($70,000 in total). Larry G. owns all of the shares of SAB Corp. and receives a distribution of $70,000. Larry's adjusted tax basis in his shares is $100,000. What is the U.S. tax consequence to Larry on the distribution from SAB Corp.? Explain.
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