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Jack Slater is the sole shareholder of an S corporation. During 2018, Jack received a distribution...

Jack Slater is the sole shareholder of an S corporation. During 2018, Jack received a distribution of $20,000. His basis in the stock at December 31, 2017 was $3,000. The S corporation earned ordinary income of $12,000 in 2018. The corporation had no accumulated E & P. What should be the amount of return of capital for Jack?
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Answer #1

This is to be done by subtracting the distribution amount from the ordinary income.

Amount of return = Ordinary income – Distribution amount

                              = 12,000 – 20,000

                              = - 8,000

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