CPA · Question 65 · Area V: Entity Taxation
A taxpayer is a 50% shareholder in an S corporation. The corporation has $0 accumulated E&P. At the beginning of the year, the shareholder's stock basis was $10,000. The corporation reported $5,000 of ordinary income and distributed $20,000 cash to the shareholder. What is the shareholder's recognized gain?
Answer options:
$0
$5,000
$10,000
$20,000
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