Mesquite Inc., an S Corporation, had accumulated earnings and profits of $120,000 at the beginning of 2023. Alex and Priya each own 50% of the stock with a basis in their stock of $80,000 on January 1, 2023. Mesquite generated $250,000 of ordinary income in 2023 with no distributions. In 2024, the company had $160,000 of ordinary income and made distributions of $200,000. What is Alex's basis in his Mesquite stock on January 1, 2025?
Mesquite Inc., an S Corporation, had accumulated earnings and profits of $120,000 at the beginning of 2023. Alex and Priya each own 50% of the stock with a basis in their stock of $80,000 on January 1, 2023. Mesquite generated $250,000 of ordinary income in 2023 with no distributions. In 2024, the company had $160,000 of ordinary income and made distributions of $200,000. What is Alex's basis in his Mesquite stock on January 1, 2025?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter13: Corporations: Earning & Profits And Distributions
Section: Chapter Questions
Problem 21P
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Transcribed Image Text:Mesquite Inc., an S Corporation, had accumulated earnings and profits of
$120,000 at the beginning of 2023. Alex and Priya each own 50% of the stock with
a basis in their stock of $80,000 on January 1, 2023. Mesquite generated $250,000
of ordinary income in 2023 with no distributions. In 2024, the company had
$160,000 of ordinary income and made distributions of $200,000. What is Alex's
basis in his Mesquite stock on January 1, 2025?
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