Oscar buys a 10% interest in Britanny Corporation paying $92,000 cash on January 1,2016.During 2016,Britanny Corporation reports a loss of $30,000 and pays cash dividends to shareholders of $10,000.For 2017,Britanny Corporation has a loss of $60,000 and pays cash dividends of $20,000.If Britanny Company is organized as an S Corporation,Oscar's basis in the Britanny Corporation stock at the end of 2017 is:

Question

Quizplus · Accepted Answer

Oscar's initial basis is $92,000. In 2016, his share of the loss is $3,000 (10% of $30,000), and he receives $1,000 in dividends (10% of $10,000), reducing his basis to $88,000. In 2017, his share of the loss is $6,000 (10% of $60,000), and he receives $2,000 in dividends (10% of $20,000), reducing his basis to $80,000.

Oscar Buys a 10% Interest in Britanny Corporation Paying $92,000