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 ending stock basis, we need to start with the beginning stock basis (which is typically the amount the shareholder originally invested in the corporation) and adjust it for any increases or decreases during the year. 
Beginning stock basis: $200,000 
+ Share of S corporation taxable income: $50,000 
- Distribution to shareholder: $35,000 
+ Additional capital contribution: $1,960 
Ending stock basis: $214,960 (Option C)

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