Hector Formed H Corporation as a C Corporation at the Beginning

Essay

Hector formed H Corporation as a C corporation at the beginning of 2020. Hector was the sole shareholder of H Corporation. H Corporation reported 2020 taxable income (and earnings and profits)of $200,000. At the beginning of 2021, H Corporation elected S corporation status. During 2021, H Corporation had a rough year, reporting an ordinary business loss of $70,000, $4,000 of dividend income, and $3,000 of interest income. H Corporation also distributed $15,000 to Hector. What is the amount and character of gain/income Hector must recognize on the distribution (if any)? What is the balance in H Corporation's accumulated adjustments account (AAA)at the end of 2021?