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Use these facts to answer questons 22 and 23: Tandy Corp., a calendar year S corporation, has $5,000 of accumulated earnings and profits (AE&P) as

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Use these facts to answer questons 22 and 23: Tandy Corp., a calendar year S corporation, has $5,000 of accumulated earnings and profits (AE\&P) as of the beginning of 2022. At the end of 2022, pre-distribution AAA (i.e., the AAA balance before considering the distribution) totals $8,000. During 2022, Polly, the sole shareholder, receives a cash distribution of $12,000 from Tandy. Polly's pre-distribution basis in her stock (i.e., before adjustment for the distribution) is $10,000. Tandy Corp. elected S status in 1999. How much of this distribution should Polly report in her 2022 personal tax return as capital gain? a. $2,000. b. zero. c. $4,000, d. $5,000. QUESTION 23 How much of this distribution should Polly report in her 2022 personal tax return as ordinary income? a. $2,000. a. zero. b. $4,000. c. $5,000. d. $2,000

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