Bob and Joan incorporate their partnership and elect to be taxed as an S Corporation. At the time of incorporation in Content owneu contributed securities with a basis of $10,000 and a fair market value of $15,000. Two years later the S Co securities for $18,000. Which of the following statements about the tax effects of these facts is false? The total stock basis of the shareholders is increased by $8,000 as a result of the securities sale. The shareholders are taxed on $8,000 of income as a result of the sale The S corporation is subject to an entity level built-in gains tax on $5,000 as a result of this sale

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