As of January 1,2012,Amanda,the sole shareholder of Tern (a calendar year S corporation),had a basis in her stock of $50,000.During 2012,Tern had a net operating loss of $100,000 and distributed a $70,000 dividend to Amanda.As of January 1,2012,Tern had accumulated E & P of $200,000.What is Amanda's basis in her Tern stock as of January 1,2013?

Question

Quizplus · Accepted Answer

Amanda's basis is reduced by the $100,000 loss and the $70,000 distribution, resulting in a negative basis of $120,000. However, basis cannot be negative, so it is reduced to $0.

As of January 1,2012,Amanda,the Sole Shareholder of Tern (A Calendar