You are given the following facts about a 40% owner of an S corporation,and you are asked to prepare her ending stock basis.

Question

Quizplus · Accepted Answer

The ending stock basis is calculated as follows:
Beginning stock basis + Share of income or loss + Share of capital contributions - Share of distributions
Given:
- 40% owner of an S corporation
- Beginning stock basis: $49,200
- Share of income: $40,000
- Share of capital contributions: $55,000
- Share of distributions: $70,080
Calculations:
- Share of income or loss: 40% x $40,000 = $16,000
- Share of distributions: 40% x $70,080 = $28,032
Ending stock basis = $49,200 + $16,000 + $55,000 - $28,032 = $74,120
Therefore, the best choice is B) $74,120.

You Are Given the Following Facts About a 40% Owner