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 $45,000 ten years ago and is currently worth $120,000.

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 of $ which is reported on Schedule K, and 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 of $ to Vogel's AAA.

c. Assume instead that the land had been purchased for $120,000 and was currently worth $45,000. 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 of $. Jamari would take a $ basis in the land.