Choice "A" is correct. The owner's basis in an S Corporation is increased by the owner's share of profits and decreased by the owner's share of losses. It is not affected by any bank loans increased or decreased by the corporation. It is only increased by direct loans made to the corporation by the owner.Choice "d" is incorrect. C Corporations are not flow through entities and the owner's basis is not affected by profits, losses, or loans made by the corporation. Choice "c" is incorrect.  The owner's basis in a partnership is increased by the owner's share of profits and decreased by the owner's share of losses. For a partnership, the basis is also affected by increases and decreases of bank loans. Choice "b" is incorrect.  Limited Liability Companies are taxed as C corporations or partnerships, which are both incorrect as per above.