Bev and Cabel each own one-half of the stock of Finch,Inc.,a C corporation.Each shareholder has a stock basis of $225,000.Finch has accumulated E & P of $600,000.Finch's taxable income for the current year is $100,000,and it distributes $180,000 to each shareholder.Bev's stock basis at the end of the year is:
A)$0.
B)$45,000.
C)$95,000.
D)$100,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Neither Finch's taxable income of $100,000 nor the dividends paid by Finch to Bev of $180,000 have any effect on Bev's stock basis.So her stock basis remains at $225,000.

Bev and Cabel Each Own One-Half of the Stock of Finch,Inc.,a