Lamont Is a 100% Owner of JKL Corporation

Essay

Lamont is a 100% owner of JKL Corporation. JKL has been an S corporation since its inception in 2018. During 2019, JKL distributed $20,000 to Lamont. During 2019, JKL reported $5,000 of business income and no separately stated items. What is the amount and character of the gain on the distribution, if any, Lamont must recognize in each of the following alternative scenarios? Also, what is Lamont's stock basis at the end of 2019 in each of the following scenarios?
a. Lamont's stock basis at the beginning of 2019 was $30,000.
b. Lamont's stock basis at the beginning of 2019 was $4,000.