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?

---

Definitions:

Knowledge

Knowledge is the understanding, awareness, or familiarity gained through education, experience, or research on a particular subject.

Pension Plans

Retirement plans that require an employer to contribute to a pool of funds set aside for a worker's future benefit, invested on the employee's behalf.

Older People

A demographic group typically defined as individuals of advanced age or the later part of life, often considered to be those 65 years old and above.

Child Care Benefits

Employer-provided benefits or subsidies designed to help employees with the costs and logistics of child care.