Tonya is the 100% shareholder of a corporation established five years ago. It has always been an S corporation. After adjustment for this year's corporate income, but before taking distributions into account, Tonya has a $50,000 stock basis. The corporation pays Tonya a $60,000 cash distribution. As a result of this distribution, Tonya will have an ending stock basis and recognized income of
A)
B)
C)
D)
D)
Tonya's distribution is return of capital up to the level of her stock basis so the first $50,000 of the distribution is not taxable and reduces her stock basis to $0, but the excess $10,000 is taxable.
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