Tom owns 100% of the stock in an S corporation. At the beginning of the year,...

 

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Tom owns 100% of the stock in an S corporation. At the beginning of the year, Tom's stock basis is $5,000. The S corporation has E&P from its existence as a C corporation of $12,000, and its AAA balance at the beginning of the year is $1,000. During the year, the corporation reports ordinary income of $3,500, and distributes $17,500 cash to Tom. If no by-pass election is made, at the end of the year's Tom's basis in his S corporation stock is: $3,000. a. b. c. d. e. $500. $5,000. $4,000. $0. Tom owns 100% of the stock in an S corporation. At the beginning of the year, Tom's stock basis is $5,000. The S corporation has E&P from its existence as a C corporation of $12,000, and its AAA balance at the beginning of the year is $1,000. During the year, the corporation reports ordinary income of $3,500, and distributes $17,500 cash to Tom. If no by-pass election is made, at the end of the year's Tom's basis in his S corporation stock is: $3,000. a. b. c. d. e. $500. $5,000. $4,000. $0.

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