McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 59

Maple Corp. a calendar-year corporation, was formed three years agoby its sole shareholder, Brady, who immediately elected S corporation status.On December 31 of the current year, Maple distributed $30,000 cash to Brady.What is the amount and character of gain Brady must recognize on the distribution in each of the following alternative scenarios?
a.At the time of the distribution, Brady's basis in his Maple Corp.stock was $35,000.b.At the time of the distribution, Brady's basis in his Maple Corp.stock was $8,000.c.At the time of the distribution, Brady's basis in his Maple Corp.stock was $0.