Excess Distributions

Since you cannot distribute anything in excess of AAA, the distributions must have been first RE(if there were any C corp earnings), then ROC, then payment for stock(capital gain). I think anything else is just illegal.

Can you make some of it a loan repayment?

DR AAA
DR OAA(other adjustments acct, like life insurance proceeds)
DR RE(also known as dividend from C corp)
DR PIC in excess of par(doubtful there is any)
DR Previously taxed income(old style part of AAA)
DR Capital stock(anything more goes to buying back the stock)
DR Shareholder loans(could be taxable gains)
CR Cash

Thanks so much for the help!! So, if the S-Corp was never a C-Corp and has no OAA or PTI, and has drained the AAA, the next place to pull it from is the PIC. My client bought this small S-Corp in a stock sale. She still has adequate basis in her stock for the aforementioned shareholder distributions, but she walked into the transaction with the company's AAA sitting in negative territory. So, even though it's coming out of PIT, would she have to declare capital gains on the draws if she still has adequate basis in the stock???

No wonder my brain hurts by the end of March :)

Thanks!