Fridge Corporation, an S Corporation, had accumulated earnings and profits (from its C corp years)...
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Fridge Corporation, an S Corporation, had accumulated earnings and profits (from its C corp years) of $120,000 at the beginning of 2011. At that time the corporation had no balance in its AAA account. Frank and Mary respectively own 70% and 30% of the stock. They each have a basis of $40,000 in the stock at the beginning of 2011. The corporation distributed one fourth of its accumulated E&P at the end of 2011. During 2012 the corporation earned $225,000 of ordinary income and distributed two thirds of it. What is Frank's basis in the S corporation's stock at the end of 2012?
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