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Drop, Inc., a calendar year S corporation, distributes $16,000 cash to its only shareholder, Luetta,...

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Accounting

Drop, Inc., a calendar year S corporation, distributes $16,000 cash to its only shareholder, Luetta, on December 31. Luettas basis in her stock is $20,000. Drops AAA balance is $9,000, and Drop holds $3,000 of AEP and $1,000 of OAA before the distribution. Complete the following chart shown below.

If an amount is zero, enter "0".

Beginning balance Distribution from Account Effect on Stock Basis Balance after Distribution
From AAA account $9,000
From AEP account $3,000
From OAA account $1,000
From Luettas stock basis $20,000

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