Waters Corporation Is an S Corporation with Two Equal Shareholders

question 10

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: $$\begin{array} { l r } \text { Sales revenue } & \$ 500,000 \\\text { Interest income } & \mathbf { 6 , 0 0 0 } \\\text { Long-term capital gain } & \mathbf { 1 0 , 0 0 0 } \\\text { Cost of goods sold } & ( \mathbf { 2 5 0 , 0 0 0 } ) \\\text { Salary and wages } & \mathbf { ( 7 5 , 0 0 0 } ) \\\text { Other operating expenses } & \mathbf { ( 5 5 , 0 0 0 } ) \end{array}$$ 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

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Definitions:

Negative Comments

Refers to unfavorable or critical remarks made about someone or something, often highlighting issues or areas for improvement.

Employee's Personality

The collection of individual traits and characteristics that influence how a person behaves and interacts at work.

Halo Effect

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Rater Bias

An evaluator's subjective and unfounded distortion affecting performance appraisals or judgements about individuals.