Jeff Owns 50% of an S Corporation's Stock with a Basis

question 96

Essay

Jeff owns 50% of an S corporation's stock with a basis in his stock of $50,000 on January 1. In addition, the S corporation owes Jeff $30,000 on January 1. The debt has a basis of $30,000 and is evidenced by a note. The S corporation reports an ordinary loss of $150,000 for the current year. The next year, it reports ordinary income of $20,000. On January 1 of the third year, the note is repaid. Due to the repayment of the note, Jeff must report what?

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Definitions:

Current Account

A component of a country's balance of payments that measures the trade of goods and services, net earnings on investments, and transfer payments.

Goods Exports

The act of sending domestically produced goods to another country for sale or trade.

Current Account

A country's transactions with the rest of the world, including goods, services, income, and current transfers.

Net Inflow

Net inflow refers to the total incoming resources or capital minus the outgoing resources or capital in a particular time period.