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Shouldn't shareholder equity on the balance sheet and the shareholder basis in an S corporation both be the same? Aren't they a result of the same items?


The BIDaWIZ Team's Answer:

No, it doesn't have to be the same. The shareholder basis is more complicated, as it takes into account a number of additional factors such as the basis in any property contributed to the business, taxable gains that are recognized on the contribution of property, liabilities of the corporation assumed by the shareholder, and tax-exempt income of the business, among other items. This is not reflected the same on the balance sheet equity.

The BIDaWIZ Team



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