Cathy is a 40% shareholder of City Corporation. City is a calendar year S corporation. Cathy acquired her stock on January 1 of the current year for $80,000. In the current year, City reports the following results of operations, cash distributions, and salary payments:
Ordinary income allocable to Cathy......................................$30,000
Salary payments to Cathy.........................................................40,000
Long-term capital loss allocable to Cathy.................................5,000
Cash distributions to Cathy......................................................17,000
a. What is Cathy’s stock basis at the end of the current year?
b. What amounts should Cathy include in her individual tax return for the current year?