Stock and Debt Basis

S Corp track both stock and that basis.

Shareholder bases and S Corp is same as bases concept as pass through basis, except the treatment of liabilities.

• The initial stock basis is usually the amount of cash paid for the S Corp shares and the property donated to the business, while loans directly from the shareholder are included in the shareholders debt basis.

• Stock basis is increased by contribution of cash or property.

  Recognition of income, including tax exempt income

• Stock basis decreased by:

  Distributions of cash or property.

  Recognition of losses or deductions, including non-deductible expense.

• Debt basis - and an S corp is similar to calculating the stock basis. It is the original amount that shareholder loans the business. The corporation reduces it debt basis when it payoff any debt or losses exceeding the shareholder stock basis.