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Terry is the sole shareholder of Magic Corporation, an S-Corporation formed 1/1/Y1. Terry initially contributed...

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Accounting

Terry is the sole shareholder of Magic Corporation, an S-Corporation formed 1/1/Y1. Terry initially contributed property to form the corporation with a FMV of $100,000 and a basis of $75,000. The following transactions occurred in Y1: Ordinary Business Income = $29,000 Tax Exempt Interest Income = $10,000 Short Term Capital Losses = $3,000 (no other canital gains or losses) Nandeductible Expenses = $5,000 In addition Terry withdrew $40,000 from Magic Corporation. What was Terry's gross income increase and stock basis in Magic Corporation stock at the end of Y1? Gross Income $22,000 - Basis = $62,000. Gross Income $22,000- Basis = $82,000. Gross Income $17,000- Basis = $62,000. Gross Income $17,000 - Basis = $82,000

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