S Corporation AAA account
Looking for some guidance regarding the AAA account. One of the shareholders of an S Corporation sold his shares in an S corporation (50% of company) to an unrelated party. He sold his shares for $25k and his basis was $40k. I am working on the S corporation tax return. I am showing the new owner with zero inside basis and $25k outside basis. Do I leave the $40k in undistributed income in the AAA and in the retained earnings on the balance sheet?
