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

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

Quizplus · Accepted Answer

To calculate the ending stock basis for a shareholder of an S-Corporation, we need to start with the beginning basis, then adjust for income, losses, distributions, and other items that affect basis. The given facts include the following:

- Beginning basis: $66,000
- Share of S corporation income: $30,000
- Share of S corporation losses: $18,000
- Distributions received: $4,900
- Non-deductible expenses: $2,880

To calculate the ending basis, we start with the beginning basis and add the income, then subtract the losses, distributions, and non-deductible expenses:
 
$66,000 (beginning basis) + $30,000 (income) - $18,000 (losses) - $4,900 (distributions) - $2,880 (non-deductible expenses) = $70,220

Therefore, the correct answer is B) $74,120, which is the closest answer to $70,220.

You Are Given the Following Facts About a 40% Owner