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Homework answers / question archive / Shelby is a shareholder in GrizzlyCo, a calendar year S corporation

Shelby is a shareholder in GrizzlyCo, a calendar year S corporation

Finance

Shelby is a shareholder in GrizzlyCo, a calendar year S corporation. At the beginning of the year, her stock basis is $55,000, her share of the AAA is $19,000, and her share of corporate AEP is $42,000.

At the end of the year, Shelby receives from GrizzlyCo a $26,000 cash distribution. Shelby's share of S corporation items includes a $20,000 long-term capital gain and a $56,000 ordinary loss.

Determine the effects of these events on Shelby's share of the entity's AAA, her stock basis, and GrizzlyCo's AEP.

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The effects of events on Mary's share of the entity's AAA, her stock basis, and CarrollCo's AEP:      
       
  AAA Stock basis AEP
Beginning balance $19,000  $55,000  $42,000 
Distribution $19,000  $19,000  $38,000 
Balance $0  $36,000  $4,000 
Long term capital gains $20,000  $20,000  $0 
Balance $20,000  $56,000  $4,000 
Loss $56,000  $56,000  $0 
Ending balance ($36,000) $0  $4,000 

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