Question

Clampett, Incorporated, has been an S corporation since its inception. On July 15, 2021, Clampett, Incorporated, distributed $50,000 to J.D. His basis in his Clampett, Incorporated, stock on January 1, 2021, was $30,000. For 2021, J.D. was allocated $10,000 of ordinary income from Clampett, Incorporated, and no separately stated items. What is J.D.'s basis in his Clampett, Incorporated, stock after all transactions in 2021

Answer 1

Answer:

$10,000

Explanation:

Calculation to determine J.D.'s basis in his Clampett, Incorporated, stock after all transactions in 2021

Using this formula

J.D.'s basis =Original basis+Increase in basis from his distributive share of income- Distribution

Let plug in the formula

J.D.'s basis = ($30,000 + $10,000 - $50,000) J.D.'s basis =$10,000

Therefore J.D.'s basis in his Clampett, Incorporated, stock after all transactions in 2021 is $10,000