TaxGirl11
Level 3
03-19-2025
05:13 PM
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I have a new client that has negative AAA but has over $100,000 in shareholder basis for an S corp. Can they take a distribution if the AAA is negative without having to claim capital gain? They have basis so I would think they could?
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sjrcpa
Level 15
03-19-2025
06:23 PM
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Yes they can take a distribution up to their basis. Keep in mind the ordering rules for losses, deductions and distributions. The distribution can't reduce an already negative AAA account.
The more I know the more I don’t know.
