In 2010, Stephan formed a calendar-year C-corporation. In 2017, Stephan realized that his interests would be better served by converting from a C corporation to an S corporation. Thus, in 2017, Stephan filed the necessary paperwork with the IRS to convert his corporation to an S corporation. Stephan is the sole shareholder. At the beginning of 2021, Stephan had a stock basis of $500,000, an accumulated adjustments account (AAA) balance of $125,000, and accumulated earnings and profits of $205,000.
This year, Stephan receives a $250,000 distribution. Per his k-1, Stephan has a $14,000 long-term capital gain and $100,000 of non-separately stated income.
Determine Stephan’s ending balance in AAA, AEP and stock basis.