Winston is the sole shareholder of Winston Inc, an S corporation. In 2013, he paid $50,000 for his shares of stock. During the current year, he contributes a building and land to the corporation. No additional shares of stock are issued. The basis of this property is $75,000, and its fair market value is $200,000. What is Winston's basis in his Winston stock at the end of 2014?

Question

Quizplus · Accepted Answer

Winston's basis in his stock is increased by the basis of the property contributed, not its fair market value. Therefore, his basis is the original $50,000 plus the $75,000 basis of the contributed property, totaling $125,000.

Winston Is the Sole Shareholder of Winston Inc, an S