You are given the following facts about a 50% owner of an S corporation: Increase in AAA $32,000 Increase in OAA $6,300 Payroll tax penalty $2,140 Ending PTI $6,125 Beginning stock basis $36,800 Tax-exempt interest income $4,800 Insurance premiums paid (nondeductible) $2,700 Stock purchases $22,000 Prepare her ending stock basis Solution Beginning stock basis $36,800 Add: Increase in AAA (.50*$32,000) 16,000 Add: Increase in OAA (.50*$6,300) 3,150 Add: Stock purchases 22,000 Total (ending stock basis) 77,950 .

1. You are given the following facts about a 50% owner of an S corporation:
Increase in AAA
$32,000
Increase in OAA
$6,300
Payroll tax penalty
$2,140
Ending PTI
$6,125
Beginning stock basis
$36,800
Tax-exempt interest income
$4,800
Insurance premiums paid (nondeductible)
$2,700
Stock purchases
$22,000
Prepare her ending stock basis

2. Solution
Beginning stock basis $36,800 Add: Increase in AAA (.50*$32,000) 16,000 Add: Increase in
OAA (.50*$6,300) 3,150 Add: Stock purchases 22,000 Total (ending stock basis) 77,950