Show the stock and debt bases at the end of each year

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Question -

Beta Corporation, an S corporation with one shareholder, incurred the following items:

Year 1 Ordinary loss ($ 40,000)

Year 2 Ordinary income $ 27,000 Cash distribution 10,000

Year 3 Ordinary income $ 22,000 Cash distribution 17,000

At the beginning of Year 1, the shareholder's stock basis was $ 20,000, and her debt basis was $ 16,000.

a. Assuming the corporation has no accumulated E& P, show items reported by the shareholder in each year, show all basis adjustments to stock and debt, and show the stock and debt bases at the end of each year.

b. Redo Part a for Year 2 and Year 3 assuming ordinary income in Year 2 is $ 8,000 instead of $ 27,000.

Reference no: EM132438912

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