Been pulling my hair out so I decided to seek some insight before I go bald.

Here's the situation:

1. I own 100% of S-Co
2. I had no basis in S-Co at the beginning of '13. (actually negative basis)
3. S-Co had net income from operations of $30,000.

4. S-Co is a partner in a Partnership. It had no basis at beg of '13
5. S-Co contributed $2000 to the Partnership in '13
6. S-Co received $5145 in Partnership distributions in '13
7. S-Co sold interest in Partnership for $50,000.

Questions:

a. Is the 50k treated as S-corp income to me (K-1, line 16d ---> Sch E --->1040 Line 17) or do I account for this cap gain differently? (I'm hoping it flows thru to Sch D where I can offset the gain with a cap loss carry forward)

or

b. Do I net the partnership activities? (ie. 50k+5145-2000=$53,145) and treat all the money as S-corp income. (no differentiating between distributions vs cap gain)

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c. Assuming the same factors above....If the S-corp distributed more money than it's net profit, how is that accounted for?


Thank you sooooo much in advance. I hope all salient points have been properly provided.

pac