Wanda is a 20 percent owner of Video Associates, which is treated as a pass through entity

Question:

Wanda is a 20 percent owner of Video Associates, which is treated as a pass through entity for federal income tax purposes. This year, Wanda was allocated $45,000 of ordinary income from Video Associates, $1,000 of tax-exempt interest income, and $2,000 of nondeductible expenses. Wanda also received a $10,000 from Video Associates this year. At the beginning of the year, Video Associates had outstanding debt of $100,000. At the end of the year, the entity's outstanding debts increased to $130,000.
a. If Video Associates is a and her basis in her interest at the beginning of the year is $30,000, determine Wanda's tax basis in her interest at year-end.
b. If Video Associates is an S and her basis in her S stock at the beginning of the year is $10,000, determine Wanda's tax basis in her corporate stock at year-end?
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