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S-Corporation - Shareholder Stock Basis

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

Solution Preview

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

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

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.