Which of the Following Is Not an Adjustment to an S

question 115

Multiple Choice

Which of the following is not an adjustment to an S corporation shareholder's stock basis?

• A) Increase for any contributions to the S corporation during the year.
• B) Increase for shareholder's share of ordinary business income.
• C) Decrease for shareholder's share of nondeductible items.
• D)Increase for distributions during the year.
• E)None of these

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Definitions:

Implicit Costs

The opportunity costs that arise from using resources that a company already owns for production, instead of earning revenue from these resources elsewhere.

Explicit Costs

Explicit costs refer to direct payments made to others in the course of running a business, such as wages, rent, and materials.

Variable Cost

Costs that change in proportion to the level of output or production activity.

Baking Supplies

Items and ingredients specifically used for the process of baking, such as flour, yeast, baking soda, and baking pans.