Basis of Shareholder's Interest in S Corporations

Free CPA TCP (Tax Compliance & Planning) lesson in Entity Tax Compliance. 17 min read, ~2,618 words.

Initial stock basis equals cash plus adjusted basis of contributed property, reduced by liabilities assumed by the S corporation. Stock basis increases for income items (ordinary income, separately stated income, tax-exempt income) and capital contributions; decreases for distributions, nondeductible expenses, and deductible losses. Debt basis arises only from direct shareholder...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Key Takeaways
• Exam Shortcuts

Learning objectives

• II.B1

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