Question

15. Which of the following items, if any, decreases an S corporation's AAA?

a.Section 1231 loss.

b.Distribution from earnings and profits.

c.Expenses related to tax-exempt income.

d.Depletion in excess of basis.

Answer 1

Section 1231 loss decreases an S corporation's AAA.

Distribution from earnings and profits and Expenses related to tax-exempt income have no effect on AAA

Depletion in excess of basis increases an S corporation's AAA

Option A Section 1231 loss is correct