Spence, Inc., a calendar year S corporation, generates an ordinary loss of $$110,000$ and makes a distribution of $$140,000$ to its sole shareholder, Storm Nelson. Nelson's stock basis and AAA at the beginning of the current year are $$200,000.$

Complete the memo to your senior manager, Ahmad McMullin, discussing the tax treatment of Spence's activities.

If an amount is zero, enter $"0".$

TAX FILE MEMORANDUM

Date: October $6,2022$

RE: S Corporation Losses and Distributions

S corporation tax law now provides that distributions are treated as reductions of stock basis

considering any losses. Thus, Storm Nelson, the sole shareholder, should treat the loss and distribution as follows.

Nelson's beginning stock basis $fill in the blank $2$

Less: Current$-$year distributions fill in the blank $3$

Basis before loss $fill in the blank $4$

Less: Partial loss fill in the blank $5$

Ending stock basis $fill in the blank $6$

Suspended loss $fill in the blank $7$

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