At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corporation years. During the year, Clampett, Inc. earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J. D. owns 25% of Clampett, Inc., his basis in Clampett, Inc. at the beginning of the year is $30,000, and his share of the distribution was $50,000. What is J. D.'s basis in the Clampett, Inc. stock after these transactions?

Question

Quizplus · Accepted Answer

(Original basis of $30,000 + $12,500 share of ordinary income [$50,000 × 25%] - $37,500 distribution from AAA [$150,000 × 25%]).

At the Beginning of the Year, Clampett, Inc