Which of the following statements regarding a shareholder's basis in an S corporation is CORRECT?

A)

The basis is increased if the shareholder guarantees a loan for the S corporation.

B)

The basis is increased by net income and distributions that flow through to the shareholder.

C)

Basis points are retroactively taxed on the corporations P&L statement.

D)

The basis is increased if the shareholder actually loans funds directly to the S corporation.