Like partnerships, an S corporation shareholder's basis is dynamic and must be adjusted annually.

Question

Quizplus · Accepted Answer

S corporation shareholders' basis must be adjusted annually to reflect changes in the company's income, deductions, distributions, and other items. This helps ensure that shareholders don't pay taxes on income that they didn't actually receive and that they can properly claim losses on their tax returns.

Like Partnerships, an S Corporation Shareholder's Basis Is Dynamic and Must