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

question 18

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.After any loss deductions this year, what is Jamaal's stock and debt basis at the end of the year if Jamaal is a 50 percent shareholder of the S corporation?

• A)$27,000 stock basis; $10,000 debt basis.
• B)$0 stock basis; $10,000 debt basis.
• C)$67,000 stock basis; $10,000 debt basis.
• D)($13,000)stock basis; $10,000 debt basis.
• E)None of the choices are correct.

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Definitions:

Bond Discount

The difference between the bond's face value and its selling price when the bond is sold for less than its face value.

Bond Premium

The amount by which the market price of a bond exceeds its face value.

Annual Interest Expense

The total amount of interest a company expects to pay on its debts over a year.

$100,000 Bond

A debt instrument issued by a corporation or government entity, with a principal amount of $100,000, to raise funds from investors.