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23 July, 09:31

Typing, Inc. has been an S corporation since its inception. On July 4, 2019, Typing distributed $50,000 to Jerusha. Her basis in Typing stock on January 1, 2019, was $35,000. For 2019, she was allocated $6,000 of ordinary income from Typing and no separately stated items. What is the amount of income Jerusha recognizes related to Typing in 2019?

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  1. 23 July, 09:47
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    Answer is $15,000

    $6,000 share of ordinary income plus $9,000 gain for a $50,000 distribution in excess of her $41,000 stock basis.
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