Question

Samantha owns 1,000 shares in Evita, Inc., an S corporation, that uses the calendar year. Her stock basis at the beginning of the tax year was $60,000. Evita's ordinary income for the year was $22,000 through the date of sale, and Samantha receives a distribution of $35,000 on May 3rd. Her stock basis at the end of the year is:

Answer 1

Answer:

$47,000

Explanation:

Stock basis at the time of sales = Stock basis at the beginning + Ordinary income for the part year - Distribution received

it is provided that opening Stock = $60,000  

Ordinary income for the part-year = $22,000

Distribution amount received = $35000

Her stock basis at the end of the year is = $60,000 + $22,000 - $35,000

= $82,000 - $35,000

= $47,000