LO.6, 8, 9, 11 In 2012, 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 at the beginning of the year is $200,000. Write a memo to your senior manager, Aaron McMullin, discussing the tax treatment of Spence’s activities.