You are given the following facts about a one-shareholder S corporation, and you are asked to prepare the shareholder's ending stock basis.

Question

Quizplus · Accepted Answer

To calculate the shareholder's ending stock basis in an S corporation, we need to start with the initial stock basis and adjust it for various factors such as the shareholder's share of the corporation's income, losses, capital contributions, and distributions. Here are the relevant facts given in the question and the adjustments we need to make:

1. Initial stock basis: $240,000
2. Share of S corporation losses: $55,000
3. Share of S corporation income: $25,000
4. Capital contributions: $200,000 (not taxable)
5. Distributions: $195,040 (taxable)

Using these facts, we can calculate the shareholder's ending stock basis as follows:

Initial stock basis: $240,000
Minus share of S corporation losses: -$55,000
Plus share of S corporation income: +$25,000
Plus capital contributions: +$200,000
Minus distributions: -$195,040

Ending stock basis: $215,960

Therefore, the correct answer is C ($214,960).

You Are Given the Following Facts About a One-Shareholder S