Individuals A and B formed AB Corporation on October 1, 2018, and elected to be taxed as an S corporation. A contributed cash of $200,000 for a 50% stock interest. B contributed land with a fair market value of $200,000 and an adjusted basis of $198,000 for a 50% stock interest. The corporation had no activity in 2018.

In 2019, AB Corporation records indicate the following:

Gross revenues $ 850,000

Cost of sales (650,000)

Dividend income 40,000

Net capital loss (21,000)

Charitable contributions (24, 000)

Salary payments to B (not included above) (100,000)

During the year B had cash withdrawals from the corporation of $120,000, and corporation debt increased by $40,000.

A) What is Bs basis in her corporation interest on October 1, 2018? What is the corporations basis in the property contributed by A and B on October 1, 2018?

B) Compute AB Corporations ordinary income for 2019.

C) Compute Bs stock basis at the end of 2019.

D) Briefly describe, in general terms, the tax results that would occur if AB were a partnership.