Question

Which of the following is not an adjustment to an S corporation shareholder's stock basis? Multiple...

Which of the following is not an adjustment to an S corporation shareholder's stock basis?

Multiple Choice

  • Increase for any contributions to the S corporation during the year.

  • Increase for shareholder's share of ordinary business income.

  • Decrease for shareholder's share of nondeductible items.

  • Increase for distributions during the year.

  • None of the choices are correct.

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Homework Answers

Answer #1

Answer: Increase for distributions during the year

Explanation:

Distributions decrease basis.

So, Increase for distribution during the year is not an adjustment to S corporation shareholder's stock basis.

Following are the adjustments:

  • Increase for any contributions to the S corporation during the year.
  • Increase for shareholder's share of ordinary business income.
  • Decrease for shareholder's share of nondeductible items

Thus,

Option-iv:Increase for distributions during the year is correct.

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