The profits of a business owned by Taylor (60%)and Maggie (40%)for the current tax year are $100,000.If the business is a C corporation,there is no effect on Taylor's basis in her stock.If the business is a partnership or an S corporation,Taylor's basis in her partnership interest or basis in her stock is increased by $60,000.

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When the business is a partnership or an S corporation, the profits are passed through to the owners and increase their basis in their respective ownership interests. Since Taylor owns 60% of the business, her basis is increased by $60,000. This is true even if the business is a C corporation, but in that case, it does not affect Taylor's basis in her stock because the profits are not passed through to her.

The Profits of a Business Owned by Taylor (60%)and Maggie