Enrolled Agent Exam [Part 1] 81, S Corporation Distributions and Basis

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: • How to determine if an S corporation distribution is a tax-free return of capital or a taxable capital gain. • The critical difference between stock basis and debt basis, and why only stock basis absorbs distributions tax-free. • The specific year-end basis ordering rule: Income first, then Distributions, then Losses. • How to apply the four-tier distribution system for S corps with prior C corporation Earnings and Profits (E&P). • Why shareholder basis is the ultimate limit for deducting S corporation losses passed through on Schedule K-1. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or Youtube Channel: https://www.youtube.com/@Open-exam-prep