3. LO.5, 6 Holbrook, a calendar year S corporation, distributes $15,000 cash to its only shareholder, Cody, on December 31. Cody’s basis in his stock is $20,000, Holbrook’s AAA balance is $8,000, and Holbrook holds $2,500 AEP before the distribution.

Complete the chart below using spreadsheet software such as Microsoft Excel.

Basis in Stock Distribution from Account Effect on Stock Basis From AAA account From AEP account From Cody’s stock basis