Carlota and Dave formed an S corporation; Carlota owns 75% of the outstanding shares, and Dave owns the rest. When the entity's AAA balance is $1 , 000 , 000 , it distributes an asset to each shareholder; the basis of each asset to the corporation is $202 , 500 . Carlota's asset is worth $283 , 500 , and Dave's is worth $243 , 000 . a. How much gain, if any, does the the corporation recognize as a result of the distribution? \$ b. By how much, if any, does the distribution increase Dave's gross income? $ c. By how much, if any, does the distribution increase Carlota's gross income? \$
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Carlota and Dave formed an S corporation- Carlota owns 75- of the outs.docx
1. Carlota and Dave formed an S corporation; Carlota owns 75% of the outstanding shares, and
Dave owns the rest. When the entity's AAA balance is $1 , 000 , 000 , it distributes an asset to
each shareholder; the basis of each asset to the corporation is $202 , 500 . Carlota's asset is worth
$283 , 500 , and Dave's is worth $243 , 000 . a. How much gain, if any, does the the corporation
recognize as a result of the distribution? $ b. By how much, if any, does the distribution increase
Dave's gross income? $ c. By how much, if any, does the distribution increase Carlota's gross
income? $
