On January 1,2019,Laura Wang Contributed $30,000 Cash in Exchange for 30

question 65

Multiple Choice

On January 1,2019,Laura Wang contributed $30,000 cash in exchange for 30 shares of stock in Suki Inc.,an S corporation.On May 12,Laura loaned $8,500 to Suki in exchange for a 5-year interest-bearing note.Laura's pro rata share of Suki's 2019 ordinary business loss was $34,100,and she received no cash distributions during the year.Assume the excess business loss limitation does not apply.Which of the following statements is accurate?

• A)Laura can deduct $30,000 of the loss in 2019.On January 1,2020,the basis in her Suki stock is zero,and the basis in her Suki note is $8,500.
• B)Laura can deduct $34,100 of the loss in 2019.On January 1,2020,the basis in her Suki stock is $4,400,and the basis in her Suki note is zero.
• C)Laura can deduct $34,100 of the loss in 2019.On January 1,2020,the basis in her Suki stock is zero,and the basis in her Suki note is $4,400.
• D)None of the above is accurate.

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