Determine the basis in a and b shares- Cost Accounting
The Jane Corporation, an S corporation, makes several property distributions to its two equal shareholders, A and B, during the year. The distributions are as follows:
| A | B | |
| Cash | $5,000 | $5,000 |
| Land (Basis = $5,000) | $10,000 (FMV) | |
| Equipment (Basis = $15,000) | $10,000 (FMV) |
At the beginning of the year, the corporation’s accumulated adjustments account is $35,000; A’s basis in his shares is $24,000; and B’s basis is $32,000. The corporation reports net income of $6,000 for the year, excluding any effect of the distributions. Determine the basis in A and B’s shares and the balance in the corporation’s AAA at the end of the year.
