Dudley Has a 20% Ownership Interest in a Business for Which

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The Answer is a. If the entity is a C corporation, Dudley's stock basis remains at $100,000. The profits are taxed at the C corporation level. Since the $50,000 distribution is a dividend , this transaction does not affect Dudley's stock basis.
b. If the entity is a general partnership, Dudley's basis for his ownership interest is affected by both the profits and by the distribution.

a. If the entity is a C corporation, Dudley's stock basis remains at $100,000. The profits are taxed at the C corporation level. Since the $50,000 distribution is a dividend , this transaction does not affect Dudley's stock basis. b. If the entity is a general partnership, Dudley's basis for his ownership interest is affected by both the profits and by the distribution. c. If the entity is an S corporation, Dudley's stock basis is affected by both the profits and the distribution.

c. If the entity is an S corporation, Dudley's stock basis is affected by both the profits and the distribution.

Dudley Has a 20% Ownership Interest in a Business for Which

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Dudley Has a 20% Ownership Interest in a Business for Which

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