Emeline, Inc., of Auburn, Alabama, is an accrual basis S corporation with three equal shareholders. The three cash basis shareholders have the following stock basis at the beginning of the year: Andre, $12,000; Crum, $22,000; and Barbara, $31,000.
Emeline reports the following income and expense items.
|
Operating loss |
($30,000) |
|
Short term capital gain |
37,500 |
|
Long term capital loss |
(6,000) |
|
Nondeductible fees and penalties |
(3,000) |
Emeline distributes $6,000 of cash to each of the shareholders during the tax year. Calculate each of the shareholders’ stock bases at the end of the year.