You are given the following facts about a 50% owner of an S corporation. Compute her ending stock basis. $$\begin{array} { l r }
\text { Increase in AAA } & \$ 32,000 \
\text { Increase in } O A A & 6,300 \
\text { Payroll tax penalty } & 2,140 \
\text { Owner's beginning stock basis } & 39,800 \
\text { Tax-exempt interest income } & 4,800 \
\text { Insurance premiums paid (nondeductible) } & 2,700 \
\text { Owner's additional stock purchases } & 22,000
\end{array}$$ ?

Question

You are given the following facts about a 50% owner of an S corporation. Compute her ending stock basis. $$\begin{array} { l r } 
\text { Increase in AAA } & \$ 32,000 \
\text { Increase in } O A A & 6,300 \
\text { Payroll tax penalty } & 2,140 \
\text { Owner's beginning stock basis } & 39,800 \
\text { Tax-exempt interest income } & 4,800 \
\text { Insurance premiums paid (nondeductible) } & 2,700 \
\text { Owner's additional stock purchases } & 22,000
\end{array}$$ ?

Quizplus · Accepted Answer

The correct answer is A.The ending stock basis is calculated as follows:Beginning stock basis: $39,800Increase in AAA: $32,000Increase in OAA: $6,300Payroll tax penalty: $2,140Tax-exempt interest income: $4,800Insurance premiums paid (nondeductible): $2,700Owner's additional stock purchases: $22,000Ending stock basis: $39,800 + $32,000 + $6,300 + $2,140 + $4,800 - $2,700 + $22,000 = $80,950

You Are Given the Following Facts About a 50% Owner