5. William and Joan form an S corporation with William owning 30 percent of the stock and Joan the remaining 70 percent. Joan contributed $80,000 cash and services valued at $4,000. William contributed $6,000 cash and property valued at $30,000 that has a basis of $20,000. At the end of the year, the S corporation reports the following:

Ordinary income (excluding salary) $90,000 Tax-exempt bond interest 2,000 Capital loss 4,000 Salary to Joan 30,000 Cash distribution to Joan 25,000 3-year note on land 15,000 What is Williams’s basis in his S corporation interest at year-end?

a. $43,400

b. $45,800

c. $47,900

d. $45,900