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

question 119

Multiple Choice

Suppose that at the beginning of 2019 Jamaal's basis in his S corporation stock is $1,000 and he has a $10,000 debt basis associated with a $10,000 loan he made to the S corporation.In 2019, Jamaal's share of S corporation income is $4,000, and he received a $7,000 distribution from the S corporation.What is Jamaal's stock and debt basis after these transactions?

• A)$0 stock basis; $8,000 debt basis.
• B)$0 stock basis; $10,000 debt basis.
• C)$5,000 stock basis; $10,000 debt basis.
• D)$5,000 stock basis; $3,000 debt basis.
• E)None of the choices are correct.

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Definitions:

Differentiation

The process of identifying and emphasizing the unique characteristics or features of something or someone.

Inner Cell Mass

The mass of cells inside the embryonic blastocyst, from which the embryo and eventually the fetus develop.

Endoderm

Cells of the inner cell mass of the embryo that develop into the digestive system and the lungs.

Ectoderm

Cells of the inner cell mass of the embryo that develop into the outer surface of the skin, the nails, part of the teeth, the lens of the eye, the inner ear, and the central nervous system.