Smart Corp., a calendar-year corporation, was formed in 20×3 and made an S Corp election in 20×6 that is still in effect. Its book and records for 20×3 reflect the following information:
AEP at 1/1/20×3 $90,000
AAA at 1/1/20×3 $50,000
Ordinary income for 20×3 $200,000
Smart Corp is solely owned by Roger, whose basis in Smart's stock was $100,000 on Jan 1, 20×3. During 20×3, Smart distributed $310,000 to Roger. What is the amount of the $310,000 distribution that Roger must report as dividend income for 20×3 assuming no special election were made with regard to the distribution and what is Roger basis of Smart Corp.
A. Dividend income – $90,000 ; Roger basis – $100,000
B. Dividend income – $60,000 ; Roger basis – $5,000
C. Dividend income – $60,000 ; Roger basis – $0
D. Dividend income – $90,000 ; Roger basis – $5,000
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