Corporate nonliquidating distributions problems
Distribution source and shareholders' basis for their corporate investment determine the tax consequences of distributions from S corporations.The regulations being proposed under IRC Secs 13 provide the particulars of adjustments to stock basis and distributions to S corporation stockholders.
The beginning basis for stock is the amount the shareholder invested to obtain the stock.
The beginning basis for debt is the amount the shareholder loaned to the corporation.
Stock Basis Rules Under the proposed regulations, the basis of stock is adjusted in the following order: Increases a.
Capital contributions by shareholders to the corporation; b.
Separately stated income items (whether taxable or not); c. Excess of depletion deductions over basis of property subject to depletion. Non-deductible expenses that are not properly chargeable to a capital account also reduce stock basis; b.