Lena Tucker contributed $20,000 in cash and land with an adjusted basis of $100,000 and a...

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Lena Tucker contributed $20,000 in cash and land with anadjusted basis of $100,000 and a fair market value of $140,000 to anewly formed corporation in return for 1,000 shares of stock in thecorporation. During Year 1, Lena's pro rata share of thecorporation's separately and nonseparately stated items of incomewas $40,000 (including $5,000 of tax-exempt interest), and her prorata share of the corporation's separately stated items of loss anddeductions was $80,000. During the year she received distributionstotaling $30,000. What is her adjusted basis in the 1,000 shares ofstock?
Same facts as in the previous problem. In Year 2, Lena's prorata share of income is $30,000, and her pro rata share ofseparately stated items of loss and deductions is $70,000. Shereceived distributions totaling $25,000 during the year. Whatamount of separately stated losses and deductions may Lena deductfor the year? What would happen if Lena loans the company $20,000during the year?

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Adjusted basis is a concept driven by the IRS code which requires a tax payer to calculate the adjusted cost of assets for the purposes of tax accounting and declaration of accurate income for the purposes of tax payments In general terms adjusted cost can be understood as a mechanism See Answer

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Lena Tucker contributed $20,000 in cash and land with anadjusted basis of $100,000 and a fair market value of $140,000 to anewly formed corporation in return for 1,000 shares of stock in thecorporation. During Year 1, Lena's pro rata share of thecorporation's separately and nonseparately stated items of incomewas $40,000 (including $5,000 of tax-exempt interest), and her prorata share of the corporation's separately stated items of loss anddeductions was $80,000. During the year she received distributionstotaling $30,000. What is her adjusted basis in the 1,000 shares ofstock?Same facts as in the previous problem. In Year 2, Lena's prorata share of income is $30,000, and her pro rata share ofseparately stated items of loss and deductions is $70,000. Shereceived distributions totaling $25,000 during the year. Whatamount of separately stated losses and deductions may Lena deductfor the year? What would happen if Lena loans the company $20,000during the year?