Waters Corporation Is an S Corporation with Two Equal Shareholders $\quad$

question 95

Multiple Choice

Waters Corporation is an S corporation with two equal shareholders, Mia Jones and David Kerns. This year, Waters recorded the following items of income and expense:
Sales revenue $\quad$$\quad$$\quad$$\quad$ $ 500,000
Interest income $\quad$$\quad$$\quad$$\quad$$\quad$ 6,000
Long-term capital gain $\quad$$\quad$ 10,000
Cost of goods sold $\quad$$\quad$$\quad$ (250,000 )
Salary and wages $\quad$$\quad$$\quad$ (75,000 )
Other operating expenses $\quad$ (55,000 )
Waters distributed $25,000 to each of its shareholders during the year. If Mia's adjusted tax basis in her partnership interest was $50,000 at the beginning of the year, compute her adjusted tax basis in her partnership interest at the end of the year.

• A) $93,000
• B) $118,000
• C) $50,000
• D) $85,000