Athena is the sole shareholder of Parthenon, Inc., an S Corporation. Parthenon has beginning AAA as of 1/1/98 of $25,000, beginning AE&P of $50,000, and OAA of $5,000. Athena has a beginning adjusted basis in her stock of $25,000. During 1998, Parthenon had $50,000 in ordinary income, ($20,000) in capital losses, and distributed $55,000 to Athena on 12/31/98. In addition, Parthenon had (20,000) in positive timing differences, $15,000 in negative timing differences, and 30,000 in permanent differences. Parthenon made $75,000 in distributions to Athena during the year.
Athena is the sole shareholder of Parthenon, Inc., an S Corporation. Parthenon has beginning AAA as of 1/1/98 of $25,000, beginning AE&P of $50,000, and OAA of $5,000. Athena has a beginning adjusted basis in her stock of $25,000. During 1998, Parthenon had $50,000 in ordinary income, ($20,000) in capital losses, and distributed $55,000 to Athena on 12/31/98. In addition, Parthenon had (20,000) in positive timing differences, $15,000 in negative timing differences, and 30,000 in permanent differences. Parthenon made $75,000 in distributions to Athena during the year.
How much of the $75,000 is taxable to Athena and what is Athena’s ending adjusted basis?
