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Previous years cash distributions to a shareholder have reduced his or her stock basis to...

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Accounting

Previous years cash distributions to a shareholder have reduced his or her stock basis to zero in an S corporation. How will any further cash distributions be treated for tax purposes if the company continues to have losses?
A.
It will be treated as a deemed sale of the shareholders stock.
B.
It will be treated as a capital contribution to the corporation.
C.
It will receive passive activity loss treatment, subject to any limitations.
D.
It will be carried over indefinitely to be offset with future earnings.

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