You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? $$\begin{array}{l}
\begin{array} { l r }
\text { Increase in AAA } & \$ 31,000 \
\text { Increase in OAA } & 6,300 \
\text { Payroll tax penalty } & 2,140 \
\text { Beginning stock basis } & 39,800 \
\text { Stock purchases } & 22,000 \
\text { Tax-exempt life insurance proceeds } & 4,800 \
\text { Life insurance premiums paid } & 2,700
\end{array}\
\text { (nondeductible) }
\end{array}$$
A) $61,800
B) $68,100
C) $99,100
D) $100,100

Question

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? $$\begin{array}{l}
\begin{array} { l r } 
\text { Increase in AAA } & \$ 31,000 \
\text { Increase in OAA } & 6,300 \
\text { Payroll tax penalty } & 2,140 \
\text { Beginning stock basis } & 39,800 \
\text { Stock purchases } & 22,000 \
\text { Tax-exempt life insurance proceeds } & 4,800 \
\text { Life insurance premiums paid } & 2,700
\end{array}\
\text { (nondeductible) }
\end{array}$$
A) $61,800
B) $68,100
C) $99,100
D) $100,100

Quizplus · Accepted Answer

The ending stock basis is calculated as: Beginning stock basis + Increase in AAA + Stock purchases + Tax-exempt life insurance proceeds - Nondeductible expenses (life insurance premiums). Thus, $39,800 + $31,000 + $22,000 + $4,800 - $2,700 = $99,100.

You Are Given the Following Facts About a Solely Owned