F Company is an S corporation.It distributes farm acreage to its sole shareholder, H, whose stock basis before the distribution is $50,000.The corporation's basis in the acreage is $50,000 and the FMV is $200,000.The corporation has no accumulated AEP from C corporation years.After the distribution, H's basis in the stock is

Question

Quizplus · Accepted Answer

When an S corporation distributes property to its shareholder, the shareholder's basis in the distributed property is equal to the corporation's basis in the property at the time of the distribution. In this case, the corporation's basis in the acreage is $50,000, so H's basis in the distributed property is also $50,000. H's basis in the stock will remain unchanged after the distribution. Therefore, the answer is C.

F Company Is an S Corporation