Samantha owned 1,000 shares in Evita,Inc. ,an S corporation,that uses the calendar year.On October 11,2010,Samantha sells all of her Evita stock.Her basis at the beginning of 2010 was $60,000.Her share of the corporate income for 2010 was $22,000,and she receives a distribution of $37,000 between January 1 and October 11,2010.Her basis at the time of the sale is:

Question

Quizplus · Accepted Answer

When calculating the basis for S corporation stock, we start with the initial investment and adjust for income and distributions.

Samantha's initial basis was $60,000. She received $22,000 of income and $37,000 of distributions, which reduces her basis by $15,000 ($22,000 - $37,000).

Therefore, Samantha's basis at the time of sale is $45,000 ($60,000 - $15,000). Therefore, the best choice is A) $45,000.

Samantha Owned 1,000 Shares in Evita,Inc