P Corp, an accrual basis, calendar year S corporation, has been
an S corporation since its inception. At the beginning of the
current year, S owned 50% of the 100 issues shared of P stock, and
had a $3,000 tax basis in P stock. During the current year, P had
$200,000 in net business income and $4,000 in M county municipal
bond interest income. P made no distributions to its shareholders.
What was S’s tax basis in P stock at year end?

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