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

question 97

Multiple Choice

Suppose that at the beginning of 2019 Jamaal's basis in his S corporation stock is $0, he has a $0 debt basis associated with a $10,000 loan he made to the S corporation, and he has a $5,000 suspended loss from the S corporation.In 2019, Jamaal contributed $8,000 to the S corporation, and the S corporation had ordinary income of $4,000.Assume that Jamaal owns 40 percent of the S corporation.How much net income or loss does Jamaal report this year from the S corporation?

• A)$4,000 income.
• B)$1,600 income.
• C)$1,000 loss.
• D)$3,400 loss.
• E)None of the choices are correct.

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