S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities.

Name: S shareholders cannot increase the basis of their stock by a ratable share of the general S corporation liabilities.
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Question

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Shareholders of an S corporation cannot increase their basis by their share of liabilities. The basis of S corporation stock can only be increased by contributions of capital or income.

S Shareholders Cannot Increase the Basis of Their Stock by a Ratable