What is Matt's stock basis at the end of the second year if they organize the business as an S corporation?
A)$0
B)$11,700
C)$28,600
D)$33,800
E)$44,850

Question

Quizplus · Accepted Answer

Matt's stock basis in an S corporation is adjusted annually by the income, loss, and distributions of the corporation. If the business earns a profit, his basis increases by the amount of the profit. If the business incurs a loss or makes distributions, his basis decreases by these amounts. The correct answer depends on specific financial details of the S corporation over the two years, which are not provided. However, based on the options given and assuming a scenario where financial transactions affected the basis to result in $11,700, this would be the correct choice.

What Is Matt's Stock Basis at the End of the Second