Question

11-

Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett, Inc., distributed $53,000 to J.D. His basis in his Clampett, Inc., stock on January 1, 2020, was $46,000. For 2020, J.D. was allocated $6,000 of ordinary income from Clampett, Inc., and no separately stated items. What is J.D.'s basis in his Clampett, Inc., stock after all transactions in 2020?

Multiple Choice

• $52,000.

• None of the choices are correct.

• ($6,000).

• $46,000.

• $40,000.

Answer 1

ANSWER=

OPTION-(3) IS THE CORRECT ANSWER I.E. $6000.

Explanation:-

J.D.'s basis in his Clampett inc. stock after all transaction in 2020 is as follows-

Allocated Ordinary share income from clampett.inc .= $6000

Add- Capital Gain From distribution In EXCESS of basis-

Distributed Portion = $53000

Less:- J.D.'s basis in Clampett    = $46000

Less:- Ordinary income from the allocation od distribution share= $6000

CAPITAL GAIN :- = NIL*

TOTAL = $6000

*SInce, J.D. has no Capital gain because any excess distribution in not available, therefore there is no taxable income,no capital gain.

The only J.D.'s basis of stock available in 2020 is only $6000.(Answer)