Sammy Buys a 20% Interest in Duvall Corporation Paying $100,000

Multiple Choice

Sammy buys a 20% interest in Duvall Corporation paying $100,000 cash on January 1, 2013. During 2013, Duvall Corporation reports a loss of $60,000 and pays cash dividends to shareholders of $5,000. For 2014, Duvall Corporation has income of $200,000 and pays cash dividends of $40,000. If Duvall Company is organized as an S Corporation, Sammy's basis in the Duvall Corporation stock at the end of 2014 is:

A) $ 88,000
B) $ 89,000
C) $100,000
D) $119,000
E) $128,000