Assume that at the end of 2017, Clampett, Inc. (an S corporation) distributes property (fair market value of $40,000, basis of $5,000) to each of its four equal shareholders (aggregate distribution of $160,000). At the time of the distribution, Clampett, Inc. has no corporate E&P and J. D. has a basis of $50,000 in his Clampett, Inc. stock. What is J. D.'s stock basis after the distribution?

Question

Quizplus · Accepted Answer

J. D.'s stock basis is reduced by the basis of the distributed property ($5,000), resulting in a new basis of $45,000.

Assume That at the End of 2017, Clampett, Inc