Question

Clampett, Inc., has been an S corporation since its inception. On July 15, 2020, Clampett, Inc., distributed $50,000 to J.D. His basis in his Clampett, Inc., stock on January 1, 2020, was $30,000. For 2020, J.D. was allocated $10,000 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?

Answer 1

$20,000

Step-by-step explanation:

J.D.'s basis in his Clampett, Inc., stock after all transactions in 2020 is as follows:

Allocated ordinary share income from Clampett, Inc. = $10,000

Add: Capital gain from distribution in excess of basis:

Distributed portion = $ 50,000

Less: J.D.'s basis in Clampett = $(30,000)

Less: Ordinary income from the

allocation of distributive share= $(10,000)

Capital gain = $10,000

= $20,000