Case Scenario: Paige Corporation: Adjusted Basis
Louise is one of four shareholders in Paige Corporation; an S corporation formed in year 1. Louise materially participates in the conduct of the business. Louise paid $5,000 for her 25% share of the business. Paige Corporation's income for year 1 was $2,400 plus $400 in interest income. Louise received a $500 cash distribution in August of this year. Compute Louise's adjusted basis at the end of the year.
Answer the following question based on Scenario 1. What is Louise's adjusted basis at the end of year 1?
a) $4,500 b)$5,200 c) $5,700 d) $7,300