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

question 126

Multiple Choice

Suppose that at the beginning of 2019 Jamaal's basis in his S corporation stock was $27,000 and Jamaal has directly loaned the S corporation $10,000.During 2019, the S corporation reported an $80,000 ordinary business loss and no separately stated items.How much of the ordinary loss is deductible by Jamaal if he owns 50 percent of the S corporation?

• A)$10,000.
• B)$27,000.
• C)$37,000.
• D)$40,000.
• E)None of the choices are correct.

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Definitions:

Allowance for Doubtful Accounts

A contra-account reducing accounts receivable on a balance sheet, reflecting the amount of receivables a company believes it will not collect.

Estimated Uncollectible

The anticipated portion of receivables that a company expects not to collect.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Open Account

A credit arrangement where goods or services are provided to a customer with the understanding that the customer will pay the supplier at a later date.