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Unformatted text preview: om operations and $10,000 from investment interest income. There were no other
transactions that year. Each shareholder's basis in the stock of Haas will increase by:
Choice "b" is correct. The basis of a shareholder's stock in an S corporation is increased by any item of
income and decreased by any item of loss or deduction that passes through to the shareholder. Each
shareholder reports ½ of $60,000.
Choice "a" is incorrect. The S corporation had $50,000 income from operations, of which ½ is reported by
each shareholder. However, investment income must also be considered.
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Becker CPA Review, PassMaster Questions
Lecture: Regulation 3 Choice "c" is incorrect. Investment income must also be considered.
Choice "d" is incorrect. The basis of a shareholder's stock in an S corporation is increased by any item of
income and decreased by any item of loss or deduct...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land