Billy Baxter is the sole owner of Aztech Industries Inc Baxt

Billy Baxter is the sole owner of Aztech Industries Inc.. Baxter\'s basis in the Aztech stock is $100,000. Aztech makes a cash distribution to Baxter in excess of its current and accumulated E&P. Baxter receives $50,000, $20,000 of which exceeds E&P of which exceeds E&P. What is Baxter\'s post-distribution basis in his Aztech Industries shares?

Solution

Solution :-

Post-distribution basis of Baxter in the shares of Aztech Industries Inc., = 100000 * 20000 / 50000

= 100000 * 0.40

= $ 40,000.

Conclusion :- Post-distribution basis of Baxter in the shares of Aztech Industries Inc., = $ 40,000.