laquisha converted her sole proprietorship to an S corporation and transferred several assets to the corporation...
laquisha converted her sole proprietorship to an S corporation and transferred several assets to the corporation the asset cost $ 20,000 with adjusted basis of $14,700 she also spent an additional $ 750 to make conversion to an s corporation. What is her beginning basis in the S Corporation? A $14700 or B $15,450 or C $20,000 or D $ 20,750
Homework Answers
THE CORRECT OPTION IS B. $15450
- As per IRS Publication 551, the basis of any asset transferred to s corporation is the smaller amount of the fair market value of asset or the adjusted basis of the asset.
- Adjusted basis of asset is the original cost of asset and any improvements to the asset, selling costs minus any depreciation.
- Therefore , Her beggining basis in the S corporation is her adjusted basis of $14700 which is arrived after deducting some depreciation from original cost of asset plus the additional cost of conversion.
i.e., $14700 + $750 = $15450.
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