June 10, 2022


2 Total CPE Credits


S Corporations: Distributions, Stock Basis and Loss Limitations

Learning Objectives

  • Recognize the adjustments to stock basis rules
  • Characterize the tax treatment of a distribution based on the ability to determine the balance in the accumulated adjustment account (AAA)
  • Apply the loss limitation rules considering both stock and debt basis
  • Determine the tax consequences of distributions made in the same year that there is a loss
  • Identify and evaluate tax planning opportunities and strategies

Major Topics

  • Details of the stock basis adjustments when an S election is effective
  • Rules that characterize distributions to S corporation shareholders either as potential stock basis reductions or dividend income
  • Definition of "accumulated adjustment account" (AAA)
  • Special rule when there is a "net negative adjustment"
  • The rule limiting losses to stock and shareholder loans to the corporation
  • The tax complications related to using shareholder loans to the corporation to deduct losses
  • The basis adjustment ordering rules when there are losses and distribution in the same taxable year
  • Tax planning opportunities and strategies

CPE Credits Available

Total CPE

Things to Know About This Course


Understanding the basics of taxation of individuals, corporations, S corporations and partnerships.

Advanced Preparation


Intended Audience

CPAs and attorneys.


California Society of CPAs

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