Jacob is a shareholder in Robin Corporation, an S corporation. Jacob's share of Robin's activities for the current year is a short-term capital gain of $80,000 and an operating loss of $50,000. As a result of these transactions, Jacob should increase his basis in the Robin stock by $30,000.

Question

Quizplus · Accepted Answer

Shareholders' basis in an S corporation increases by their share of income, including capital gains, and decreases by their share of losses. In this case, Jacob's share of the S corporation's activities results in a net increase of $30,000 ($80,000 - $50,000) in his basis.

Jacob Is a Shareholder in Robin Corporation, an S Corporation