Question

Clampett, Inc. (an S corporation) previously operated as a C corporation. Distributions from Clampett, Inc. are deemed to be paid in the following order: A. Shareholder's remaining stock basis, prior C corporation earnings and profit, the AAA account B. Shareholder's remaining stock basis, the AAA account, prior C corporation earnings and profit C. Prior C corporation earnings and profit, the AAA account, shareholder's remaining stock basis D. The AAA account, prior C corporation earnings and profit, shareholder's remaining stock basis

Answer 1

The Correct Answer is "D"

Step-by-step explanation:

The AAA account, earlier C enterprise income and benefit, investor's staying stock premise

As Per Section 1371(e)(1)

Disseminate tax exempt Money before end of C organization to the degree to

1. Its aggregated changes account (AAA), and
2. The investors' premise in the enterprise's stock.

So Before shutting down or end of C enterprise it ought to distribute tax exempt Money .