How much was jane basis in the s-corporation

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Problem 1: Two years ago, Susan Smith and Jane Jones formed an S-corporation, in which they each owned a 50% interest. Susan contributed $50,000 in cash, while Jane contributed $30,000 in cash, as well as $20,000 of appreciated securities. At the time of the transfer to the business, Jane's basis in those securities was $12,000. After the first year, the S-corporation generated $40,000 of profit. Each shareholder received a $16,000 cash distribution at that time. The business then suffered a loss of $6,000 in the second year of operation. Because of the firm's poor cash position, each shareholder received a nominal cash distribution of $1,000 at the end of the second year. How much was Jane's basis in the S-Corporation after the second year?

A. $29,000
B. $42,000
C. $50,000

Reference no: EM132709737

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