Dion, a shareholder of Meadow Brook Corporation, an S corporation, owned 20% of the stock for 292 days and 25% of the stock for the remaining 73 days in the year. Her stock basis at the beginning of the year was $32,000 and she purchased an additional $9,000 of stock this year. Given the amount of income and deductions listed below, compute Dion’s share of each item.

Ordinary income $80,000

Tax-exempt interest income 3,000

Salary paid to Dion (52,000)

Charitable contributions ( 6,000)

Dividends received 5,000

Short-term capital loss ( 6,000)

Refund of prior state income taxes 5,000

LTCL (7,000)

LTCG 14,000

a. What are Dion’s shares of ordinary income and separately stated items for the year?

b. What is Dion’s adjusted basis in her S stock at year-end?

Answer rating: 100% (QA)

a D ion owns 20 of Meadow Brook Corporation an S corporation For the year the corporation has ordina... View the full answer