Clampett, Incorporated, has been an S corporation since its inception. On July 15, 2021, Clampett, Incorporated, distributed $59,000 to J.D. His basis in his Clampett, Incorporated, stock on January 1, 2021, was $58,500. For 2021, J.D. was allocated $19,000 of ordinary income from Clampett, Incorporated, and no separately stated items. What is J.D.'s basis in his Clampett, Incorporated, stock after all transactions in 2021?

Question

Quizplus · Accepted Answer

J.D.'s initial basis in his Clampett, Incorporated, stock was $58,500. He received a distribution of $59,000, which reduces his basis to ($58,500 - $59,000) = ($500). Since his allocated ordinary income for the year was $19,000, his final basis in his Clampett, Incorporated, stock at the end of 2021 is ($58,500 - $59,000 + $19,000) = $18,500. Therefore, the correct choice is D.

Clampett, Incorporated, Has Been an S Corporation Since Its Inception