You Are Given the Following Facts About a Solely Owned

question 10

Multiple Choice

You are given the following facts about a solely owned S corporation. What is the shareholder's ending stock basis? $\begin{array}{lr}\text { Increase in } A A A & \$ 31,000 \\\text { Increase in } O A A & 6,300 \\\text { Payroll tax penalty } & 2,140 \\\text { Beginning stock basis } & 39,800 \\\text { Stock purchases } & 22,000 \\\text { Tax-exempt insurance proceeds } & 4,800 \\\text { Insurance premiums paid (nondeductible) } & 2,700\end{array}$ ?

• A)$61,800
• B)$68,100
• C)$99,100
• D)$100,100
• E)Some other amount

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Definitions:

Straight-Line Depreciation

A technique for spreading the expense of a physical asset evenly across its operational lifespan each year.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Present Value Method

A financial calculation that determines the current worth of a future sum of money or stream of cash flows given a specific rate of return.

Ignore Present Value

A decision to not consider the current worth of future cash flows or payments, often applied in financial analysis.