[Anonymous]

Sorry everyone. I am very confused and can’t find the answer anywhere. I’m losing my mind. Lol.

If an S-CORP distributes PROPERTY to a Shareholder, how does this PROPERTY affect the Shareholder’s BASIS?? Does the FMV or GAIN (fmv-nbv) reduce the Shareholder’s BASIS???

I know when a PARTNERSHIP distributes PROPERTY, the NBV reduces the Partner’s BASIS.

THANK YOU SO MUCH. I APPRECIATE ALL THE HELP.

[IwannabeaCPA2017]

ITs been a while since I touch Reg and rarely deal with this in practice. But you have to find out if there is a built in gain as well.. For your question if the property FMV exceeds the adjusted basis then a gain is recognize

[Anonymous]

@IwannaBeaCPA2017

Thank you for your feedback.

I understand the “built it gain aspect” but I just can’t figure out how Property distributed affects the Shareholder’s Basis (NBV or DMV) decrease.

Thanks again for your input and Goodluck!!

[Anonymous]

anyone else??

[jpj230]

Property is distributed to the shareholder at FMV and basis is reduced by the same. The S-corp treats it as if the property was sold at FMV and recognizes gain if FMV exceeds adjusted book value.

[Anonymous]

Hi Blue collar!
I happen to study to REG with you these days 🙂

Yes, when S Corp is distributing smth to a shareholder, he (SH) has to decrease his basis by FMV of this stuff he gets (same like C Corp and unlike Partnerships).
At the same time S Corp has to recognise a gain from appreciation of this asset – and this gain is passed through to shareholder(s).
So one transaction will have 2 impacts on the basis of this lucky guy.

[Anonymous]

@jpj230
@AnKalan

Thank you SO MUCH for the clarification! This topic has been driving me absolutely nuts. Lol. I couldn’t find a concise answer until I worked a MCQ that clarified my questions.

Goodluck to both of you and let’s knock out REG! It’s been my most challenging exam out of the 4!

[Anonymous]

distribution to shareholder for S Corps is the same as C Corp. Distribute @ FMV (corp recognizes gain to the extent of appreciation, if any) and shareholder basis decreases by same amount.

[Author]

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