An item which has no effect on the stock basis of an S corporation shareholder is the: c. operating income.
What is a S corporation?
A S corporation can be defined as a type of corporation that is established to meet specific requirements of the Internal Revenue Code, which typically includes being taxed under Sub-chapter S of Chapter 1.
This ultimately implies that, all S corporations are generally treated as partnerships for Federal income tax purposes in the United States of America.
In this context, we can infer and logically deduce that the operating income is an item which has no effect on the stock basis of an S corporation shareholder.
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Complete Question:
Which of the following items, if any, has no effect on the stock basis of an S corporation shareholder?
a. Advertising expenses.
b. Short-term capital gain.
c. Operating income.
d. The 20% QBI deduction.
