For each of the following independent statements, indicate whether the transaction will increase (+), decrease (), or

Question:

For each of the following independent statements, indicate whether the transaction will increase (+), decrease (–), or have no effect (NE) on the basis of a shareholder’s stock in an S corporation.

a. Expenses related to tax-exempt income.

b. Short-term capital gain.

c. Non-separately computed loss.

d. Section 1231 gain.

e. Depletion not in excess of basis.

f. Separately computed income.

g. Nontaxable return-of-capital distribution by the corporation.

h. Advertising expenses.

i. Business gifts in excess of $25.

j. Depreciation recapture income.

k. Dividend income received by the S corporation.

l. LIFO recapture tax paid.

m. Collection of a bad debt previously deducted.

n. Long-term capital loss.

o. Cash distribution to shareholder out of AAA.

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