Choice a is incorrect bakers basis is less than the

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Unformatted text preview: a. b. c. d. $50,000 $55,000 $56,000 $61,000 CPA-01941 Explanation Choice "c" is correct. Stahl's basis would be computed as follows: Beginning basis: + Income − Loss − Net capital loss $65,000 6,000 (10,000) (5,000) $56,000 (Tax-free income increases basis.) ($4,000 gain netted with $9,000 loss) Choice "a" is incorrect. This choice excludes the $6,000 of municipal interest income from the above calculation. Remember, both taxable and tax exempt items of income give the taxpayer additional basis. Choice "b" is incorrect. This choice excludes both the municipal interest income and the net capital loss from the above calculation. Remember, both taxable and tax exempt and separately and non-separately stated items (stated on the K-1) of income or loss affect a shareholder's basis. Choice "d" is incorrect. This choice excludes the net capital loss from the above calculation. Remember, both separately and non-separately stated items (stated on the K-1) of loss affect a shareholder's basis....
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