For each of the following independent statements, select either \"Increase\" \"D

Question

For each of the following independent statements, select either "Increase" "Decrease" or "No Effect" to indicate whether the transaction will increase, decrease, or have no effect on the adjusted basis of a shareholder's stock in an S corporation.

a. Expenses related to tax-exempt income. SelectIncreaseDecreaseNo EffectItem 1 b. Short-term capital gain. SelectIncreaseDecreaseNo EffectItem 2 c. Nonseparately computed loss. SelectIncreaseDecreaseNo EffectItem 3 d. Section 1231 gain. SelectIncreaseDecreaseNo EffectItem 4 e. Depletion not in excess of basis. SelectIncreaseDecreaseNo EffectItem 5 f. Separately computed income. SelectIncreaseDecreaseNo EffectItem 6 g. Nontaxable return-of-capital distribution by the corporation. SelectIncreaseDecreaseNo EffectItem 7 h. Advertising expenses. SelectIncreaseDecreaseNo EffectItem 8 i. Business gifts in excess of $25. SelectIncreaseDecreaseNo EffectItem 9 j. Depreciation recapture income. SelectIncreaseDecreaseNo EffectItem 10 k. Dividends received by the S corporation from an investment in ExxonMobil stock. SelectIncreaseDecreaseNo EffectItem 11 l. LIFO recapture tax paid. SelectIncreaseDecreaseNo EffectItem 12 m. Recovery of a bad debt previously deducted. SelectIncreaseDecreaseNo EffectItem 13 n. Long-term capital loss. SelectIncreaseDecreaseNo EffectItem 14 o. Shareholder distribution out of AAA. SelectIncreaseDecreaseNo EffectItem 15

Explanation / Answer

Incomes will increase the basis and losses will decrease the basis

a. Expenses related to tax-exempt income. No effect b. Short-term capital gain. Increases c. Nonseparately computed loss. Decrease d. Section 1231 gain. Increases e. Depletion not in excess of basis. Decrease f. Separately computed income. Increases g. Nontaxable return-of-capital distribution by the corporation. Increases h. Advertising expenses. No effect i. Business gifts in excess of $25. No effect j. Depreciation recapture income. Increases k. Dividends received by the S corporation from an investment in ExxonMobil stock. Increases l. LIFO recapture tax paid. Decrease m. Recovery of a bad debt previously deducted. Increases n. Long-term capital loss. Decrease o. Shareholder distribution out of AAA. Decrease

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