Question
Wanda is a 20 percent owner of Video Associates, which is treated as a passthrough entity for federal income tax purposes. This year, Wanda was
Wanda is a 20 percent owner of Video Associates, which is treated as a passthrough entity for federal income tax purposes. This year, Wanda was allocated $45,000 of ordinary income from Video Associates, $1,000 of tax-exempt interest income, and $2,000 of nondeductible expenses. Wanda also received a $10,000 distribution from Video Associates this year. At the beginning of the year, Video Associates had outstanding debt of $100,000. At the end of the year, the entitys outstanding debts increased to $130,000. If Video Associates is a partnership, and her basis in her partnership interest at the beginning of the year is $30,000, determine Wandas tax basis in her partnership interest at year-end. If Video Associates is an S corporation, and her basis in her S corporation stock at the beginning of the year is $10,000, determine Wandas tax basis in her corporate stock at year-end.
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