At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments...

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Accounting

At the end of the year, before distributions, Bombay (an Scorporation) has an accumulated adjustments account balance of$15,600 and accumulated E&P of $20,750 from a previous year asa C corporation. During the year, Nicolette (a 40 percentshareholder) received a $20,750 distribution (the remainingshareholders received $31,125 in distributions). (Assume her stockbasis is $41,500 after considering her share of Bombay’s income forthe year but before considering the effects of the distribution.)Required: What is the amount and character of gain Nicolette mustrecognize from the distribution? What is her basis in her Bombaystock at the end of the year?

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What is the amount and character of gain Nicolette must recognize from the distribution Dividend 8300 Return on Capital 12450 What is her basis in her Bombay stock at the end of the year Basis 29050 See Answer

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