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Question
John is the sole shareholder of Maggy Corporation, a qualified D corportation. At January 1, Year 1, John has a basis in Maggy Corporation of $2000. The corporation's Year 1 tax return shows the following:
Ordinary income $10,000
Interest income $1,000
Nondeductable expenses $2,000
Real estate rental loss $5,000
Sec. 179 deduction $1,500
Distribution to John $3,000
What is John's basis in Maggy Corporation at the end of year 1?
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