Winston is the sole shareholder of Winston Inc,an S corporation.In 2012,he paid $50,000 for his shares of stock.During the current year,he contributes a building and land to the corporation.No additional shares of stock are issued.The basis of this property is $75,000,and its fair market value is $200,000.What is Winston's basis in his Winston stock at the end of 2013?

Question

Quizplus · Accepted Answer

When Winston contributed the building and land with a basis of $75,000 and a fair market value of $200,000, the corporation's basis in the contributed property became $75,000. This means that Winston's basis in his shares also increased by the same amount, making his new basis $125,000 ($50,000 for the shares he purchased plus the $75,000 increase in basis). Therefore, the correct answer is C) $125,000.

Winston Is the Sole Shareholder of Winston Inc,an S Corporation