Identify Which of the Following Statements Is False

question 57

Multiple Choice

Identify which of the following statements is false.

• A) 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.
• B) 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.
• C) A shareholder's S corporation stock basis will increase when the shareholder acts as guarantor on a corporate indebtedness.
• D) Debt basis is restored before stock basis.

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Definitions:

Motor Neuron

A type of neuron that transmits signals from the brain or spinal cord to muscles or glands, facilitating movement and action.

Leg Muscle

Muscle groups in the leg, responsible for movement and stability, including the quadriceps, hamstrings, and calves.

Acetylcholine

A neurotransmitter involved in many functions, including muscle contraction and the modulation of alertness, memory, and learning.

Neurotransmitters

Chemical substances that transmit signals across a synapse from one neuron to another in the nervous system.