Suppose That at the Beginning of 2019 Jamaal's Basis in His

question 18

Multiple Choice

Suppose that at the beginning of 2019 Jamaal's basis in his S corporation stock was $27,000 and Jamaal has directly loaned the S corporation $10,000.During 2019, the S corporation reported an $80,000 ordinary business loss and no separately stated items.After any loss deductions this year, what is Jamaal's stock and debt basis at the end of the year if Jamaal is a 50 percent shareholder of the S corporation?

• A)$27,000 stock basis; $10,000 debt basis.
• B)$0 stock basis; $10,000 debt basis.
• C)$67,000 stock basis; $10,000 debt basis.
• D)($13,000)stock basis; $10,000 debt basis.
• E)None of the choices are correct.

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Definitions:

Confirmation Bias

The bias towards finding, interpreting, selecting, and recollecting evidence in ways that validate one's prior beliefs or notions.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, known also as the "I-knew-it-all-along" effect.

Eyewitness

A person who directly observes an event, like a crime, and can provide testimony about what happened.

Memory Accuracy

The extent to which a person's recollection of past events or information is correct and free from errors or distortions.