William is the sole shareholder of Tremer, inc., a calendar-year S corporation. The basis of Williams stock at January 1, 20X1, is $15,000. Tremer, Inc., shows the following for the taxable year ending December 31, 20X1:

Short-term capital gain $4,000

Tax penalties $1,000

Taxable loss $12,000

Section 1231 loss $2,000

What is the basis of Williams stock at December 31, 20X1?

A. $4,000

B. $7,000

C. $12,000

D. $18,000