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S-Corporation - Shareholder Stock Basis

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1. Keeping track of shareholder basis in S-Corporation stock is the responsibility of
a. the corporation
b. the shareholder

2. Knowing the basis in the stock is important
a. for limiting the amount of loss a shareholder can deduct
b. for limiting the amount of gain a shareholder must report

3. A non-taxable distribution to a shareholder
a. increases basis in the stock
b. decreases basis in the stock
c. neither

4. Shareholder basis is affected by
a. a loan directly from the shareholder to the corporation
b. a personal guarantee on a bank loan to the corporation
c. both

5. Giving a note to a corporation for the purchase of additional shares
a. increases shareholder basis
b. does not increase shareholder basis

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Solution Summary

Five multi-choice questions about shareholder basis in an S-corporation are included. The solution explains the answers in a sentence or two for each question.

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1. The shareholder must maintain his own basis in the corporation.

2. Gain reporting is never limited by basis, only loss ...

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