[emichelle2321]

I have a very good understanding of calculating S-Corp shareholder and partnership basis, but for whatever reason have gotten myself confused on calculating basis of a shareholder in a C-Corp.

Do dividends distributed increase the shareholder basis? And if its a property/stock dividend is it added to the shareholder’s basis at FMV?

Contributed property is an increase to shareholder basis at NBV(adj basis) unless it has excess liability, which would be a taxable gain to the shareholder, but the gain would not increase their basis is my understanding.

Thanks!!!

[jpj230]

Dividends paid to a C corp shareholder are taxed as dividends to the shareholder on their personal return. They do not affect C corp basis unless they cause the earnings and profits of the C corp to go below zero. If so, then they decrease the shareholders basis.

Also remember, for partnerships and S corps, dividends decrease basis.

[Author]

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