Which of the following items, if any, has no effect on the stock basis of an S corporation shareholder?
A) Operating income.
B) Short-term capital gain.
C) Advertising expenses.
D) Long-term capital loss.
E) The 20% QBI deduction.

Question

Quizplus · Accepted Answer

The 20% Qualified Business Income (QBI) deduction does not affect the stock basis of an S corporation shareholder because it is a deduction taken on the shareholder's individual tax return, not on the S corporation's tax return. The stock basis is adjusted by items reported by the S corporation, such as income, losses, and deductions, but not by deductions taken personally by the shareholder.

Which of the Following Items, If Any, Has No Effect