Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2009. Tex and Shirley each own 50% of the stock and have a basis in their stock of $50,000 on January 1, 2009. Cactus does not make any distributions during 2009 but had $200,000 of ordinary income. In 2010, ordinary income was $100,000 and distributions were $100,000. What is Tex's basis at January 1, 2011? A) $100,000 B) $150,000 C) $200,000 D) $250,000
Cactus Corporation, an S Corporation, had accumulated earnings and profits of $100,000 at the beginning of 2009. Tex and Shirley each own 50% of the stock and have a basis in their stock of $50,000 on January 1, 2009. Cactus does not make any distributions during 2009 but had $200,000 of ordinary income. In 2010, ordinary income was $100,000 and distributions were $100,000. What is Tex's basis at January 1, 2011? A) $100,000 B) $150,000 C) $200,000 D) $250,000
SWFT Essntl Tax Individ/Bus Entities 2020
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Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 31P
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Transcribed Image Text:Cactus Corporation, an S Corporation, had accumulated
earnings and profits of $100,000 at the beginning of
2009. Tex and Shirley each own 50% of the stock and
have a basis in their stock of $50,000 on January 1, 2009.
Cactus does not make any distributions during 2009 but
had $200,000 of ordinary income. In 2010, ordinary
income was $100,000 and distributions were $100,000.
What is Tex's basis at January 1, 2011?
A) $100,000
B) $150,000
C) $200,000
D) $250,000
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