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What it the basis of her stock at the end

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Question - Nancy has a corporation that has revenue of $800,000 per year. She takes a salary of $200,000 per year and the corporation has total other expenses of $500,000 per year. Corporate net income before tax is $100,000.

Nancy earns interest income of $40,000 per year on a bank savings account and she has itemized deductions of $40,000. There is no state income tax. Ignore the impact of payroll taxes, when answering the following questions. Also ignore the 20% deduction related to "qualified business income."

If Nancy operates the business as an S corporation, what it the basis of her stock at the end of 2019, assuming Nancy invested $500,000 to start the company on January 1, 2019?

Reference no: EM132534091

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