A shareholder has capital gain only to the extent that S corporation distributions to him exceed his basis in the stock plus the amount of corporate debt owed to him.

Question

Quizplus · Accepted Answer

A shareholder can have a capital gain from an S corporation if the distributions exceed their basis in the stock, but the amount of corporate debt owed to him is not typically added to the stock basis for determining capital gains. The basis calculation generally includes the initial investment and adjustments for the shareholder's share of the corporation's income, losses, and distributions, but not the corporate debt owed to them.

A Shareholder Has Capital Gain Only to the Extent That