Identify Which of the Following Statements Is False

question 31

Multiple Choice

Identify which of the following statements is false.

• A)Randy is a shareholder in an S corporation. His stock basis is $10,000 and his basis in a loan he made to the corporation is $3,000. Randy's share of the corporation's ordinary loss for the current year is $11,000. Ignoring the at-risk and passive activity limitations, Randy can deduct the loss in full.
• B)A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness.
• C)A shareholder's ratable share of the S corporation's ordinary loss reduces the adjusted basis of his/her S corporation stock. Once the basis of the stock is reduced to zero, any loss-passthrough that remains reduces the basis of S corporation debts that are owed to the shareholder.
• D)Debt basis is restored before stock basis.

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Definitions:

Pseudotransformational

Leadership characterized by manipulative techniques that appear transformational in nature but are used for the leader's personal gain rather than the benefit of the group.

Ethical Leadership Principle

Fundamental guidelines that emphasize conducting oneself and leading others with fairness, honesty, and respect.

Creativity

The ability to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.

Ethical Theories

Philosophical frameworks used to understand, analyze, and apply ethical principles to decision-making processes.