Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $187,400 ten years ago and is currently worth $468,500.

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

a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders?

Vogel recognizes [a capital gain/ordinary income] of $----------- which is reported on Schedule K, and [all of it passes through to Jamari/a proportionate share of it passes through to the shareholders]. Jamari would take a $-------------- basis in the land.

b. What is the net effect of the distribution on Vogel's AAA?

There is a net [decrease/increase] of $--------- on Vogel's AAA.

c. Assume instead that the land had been purchased for $468,500 and was currently worth $187,400. How much would Vogel recognize as a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land?

Vogel recognizes a loss $---------------- and the net effect on Vogel's AAA is [a decrease/an increase] of $------------. Jamari would take a $----------------- basis in the land.