Robert Elk Paid $100,000 for All of the Single Class

question 69

Essay

Robert Elk paid $100,000 for all of the single class of stock of Elkom Corporation,an electing S corporation,when incorporated in January,2007.Elkom's operating results and dividend distribution are as follows:
$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Tax Year } \\\text { Ending }\end{array} & \begin{array} { c } \text { Ordinary } \\\text { Income }\end{array} & \text { Distribution } \\\hline 2007 & ( \$ 40,000 ) & \\2008 & 60,000 & \$ 20,000 ( 9 / 30 ) \\2009 & 30,000 & \\\hline\end{array}$$ What is Elk's basis for his Elkom stock on December 31 of 2007?

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Definitions:

WAN

A Wide Area Network, a telecommunications network that extends over a large geographic area for the purpose of computer networking.

MAN

Metropolitan Area Network (MAN) is a large computer network that spans a metropolitan area, typically interconnecting businesses, organizations, and government entities within a city.

LAN

Local Area Network, a network that connects computers and devices in a limited geographical area like a home or office.

Digital Literacy

The ability to effectively find, use, summarize, create, and communicate information in a digital environment, encompassing a broad range of skills and knowledge.