You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis?

Question

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis?
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Quizplus · Accepted Answer

The shareholder's ending stock basis is equal to the beginning stock basis plus any income reported on the K-1, minus any losses and distributions. Beginning stock basis is $100,000. On the K-1, there is $50,000 of income allocated. There are no losses or distributions. Therefore, the ending stock basis is $100,000 + $50,000 = $150,000. However, stock basis cannot exceed the amount of the shareholder's investment in the S corporation, which in this case is $99,100. Therefore, the ending stock basis is $99,100.

You Are Given the Following Facts About a Solely Owned