Emily Is a 20% Shareholder in an S Corporation

question 4

Multiple Choice

Emily is a 20% shareholder in an S corporation.Emily acquired her interest on January 1 of the current year by investing $10,000 for 20% of the corporation's stock.In March, the corporation took out a bank loan for $100,000.The corporation reported a net loss for the current year of $200,000.How much of this loss can Emily deduct on her current year's tax return?

• A)$40,000
• B)$30,000
• C)$20,000
• D)$10,000

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