An S Corporation Shareholder Calculates His Initial Basis Upon Formation

question 112

True/False

An S corporation shareholder calculates his initial basis upon formation of the corporation like a C corporation shareholder.

---

Definitions:

Direct Labor Cost

The expense associated with labor directly involved in the production process of goods or services, distinguishing from indirect labor costs like maintenance personnel.

Materials Used

The quantity and cost of raw materials consumed in the production process, including both direct and indirect materials.

Manufacturing Overhead Account

An accounting term that aggregates all indirect costs associated with manufacturing a product.

Adjusting

The process of making modifications to certain accounts through adjusting entries to reflect the true financial status of a business at the end of an accounting period.