Reference no: EM132587450

Question 1: Stock Basis Adjustment. For each of the following items, indicate whether the item will increase, decrease, or cause no change in the S corporation's ordinary income (loss), AAA, and in the shareholder's stock basis. The corporation was formed four years ago and made its S election two years ago. During the time it was a C corporation, it accumulated $30,000 of E&P. The corporation has not distributed any of this accumulated E&P.

a. Operating profit

b. Dividend income received from domestic corporation

c. Interest income earned on corporate bond held as an investment

d. Life insurance proceeds paid on death of corporate officer

e. Long-term capital gain

f. Sec. 1231 loss

g. Sec. 1245 gain (depreciation recapture)

h. Charitable contributions

i. Fines paid for having overweight trucks

j. Depreciation

k. Pension plan contributions for employees

l. Salary paid to owner

m. Premiums paid on life insurance policy in Part d

n. Distribution of money (but not exceeding current year's earnings)