Subsequent distributions from this account are non-taxable. Burden of proof on corporation - the C corporation earnings do not exist. PTI - S corporation undistributed earnings prior to 1983. Non-taxable when distributed. Other Adjustments Account - OAA Post 1982 tax exempt income and expenses.
S corporation recognizes a gain on distribution of appreciated property.
Loss is not recognized. Similar to C corporate basis rules. 1120S or K-1 forms do not keep track of shareholder basis. NOL pass through cannot exceed a shareholder's adjusted basis in the stock plus basis of any loans made by the shareholder to the corporation. Any unused NOL is carried forward and may only be deducted by the same shareholders if and when basis in stock and loans becomes positive again.