LO.8 For each of the following independent statements, indicate whether the transaction will increase (+), decrease (−), or have no effect (NE) on the adjusted basis of a shareholder’s stock in an S corporation.

a. Expenses related to tax-exempt income.

b. Short-term capital gain.

c. Nonseparately computed loss.

d. Section 1231 gain.

e. Depletion not in excess of basis.

f. Separately computed income.

g. Nontaxable return-of-capital distribution by the corporation.

h. Advertising expenses.

i. Business gifts in excess of $25.

j. Depreciation recapture income.

k. Dividends received by the S corporation.

l. LIFO recapture tax computed at the date of the S election.

m. Recovery of a bad debt previously deducted.

n. Long-term capital loss.

o. Corporate distribution out of AAA.