Samantha owned 1,000 shares in Evita, Inc., an S corporation, that uses the calendar year. On October 11, Samantha sells all of her Evita stock. Her stock basis at the beginning of the tax year was $60,000. Evita's ordinary income for the year was $22,000 through the date of sale, and Samantha receives a distribution of $35,000 on May 3rd. Her stock basis at the time of the sale is:

Question

Quizplus · Accepted Answer

Samantha's stock basis is adjusted by adding her share of the ordinary income ($22,000) and subtracting the distribution ($35,000) from the initial basis ($60,000): $60,000 + $22,000 - $35,000 = $47,000.

Samantha Owned 1,000 Shares in Evita, Inc