Question

Typing, Inc. has been an S corporation since its inception. On July 4, 2019, Typing distributed $50,000 to Jerusha. Her basis in Typing stock on January 1, 2019, was $35,000. For 2019, she was allocated $6,000 of ordinary income from Typing and no separately stated items. What is the amount of income Jerusha recognizes related to Typing in 2019?

Answer 1

Answer is $15,000

$6,000 share of ordinary income plus $9,000 gain for a $50,000 distribution in excess of her $41,000 stock basis.