Question

Miriam converted her sole proprietorship to an S corporation and transferred several assets to the corporation. The assets cost $12,000 and had an adjusted basis of $7,400. She also contributed $5,000 to the corporation's capital account. What is her beginning basis in the S corporation?

Answer 1

Therefore, Miriam's beginning basis in the S corporation is $12,400.

Explanation:

To determine Miriam's beginning basis in the S corporation, we need to calculate the total basis by considering the assets transferred and the capital contribution.

The beginning basis in the S corporation is the sum of the adjusted basis of the transferred assets and the capital contribution.

Adjusted basis of transferred assets: $7,400

Capital contribution: $5,000

Beginning basis in the S corporation = Adjusted basis of transferred assets + Capital contribution

= $7,400 + $5,000

= $12,400

Therefore, Miriam's beginning basis in the S corporation is $12,400.