As of January 1, 2017, Amanda, the Sole Shareholder of Tern

question 122

Multiple Choice

As of January 1, 2017, Amanda, the sole shareholder of Tern (a calendar year S corporation) , had a basis in her stock of $50,000. During 2017, Tern had a net operating loss of $100,000 and distributed a $70,000 dividend to Amanda. What is Amanda's basis in her Tern stock as of January 1, 2018?

• A)($120,000)
• B)($20,000)
• C)$0
• D)$50,000
• E)None of the above

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Definitions:

Production

The process of creating goods or services by combining labor, materials, and machinery to meet consumer demand or business requirements.

Equivalent Unit

A method used in process costing that converts partially completed units into a number of fully completed units.

Process Costing

A costing method used in industries where production is continuous, allocating costs to products based on the processes or departments they pass through.

FIFO Method

An inventory valuation method where the first items acquired are the first ones sold, standing for "First In, First Out."