Which of the following correctly states the annual stock-basis ordering rules for an S corporation shareholder?
Beginning basis → + contributions → − distributions → + income items → − nondeductible expenses → − losses
Beginning basis → + income (including tax-exempt) → + contributions → − distributions → − nondeductible expenses → − losses
Beginning basis → + income → − losses → − distributions → + contributions → − nondeductible expenses
Beginning basis → + contributions → + income → − losses → − nondeductible expenses → − distributions