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

question 94

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.What is Jamaal's stock and debt basis at the end of 2019?

• A)$0 stock basis; $4,600 debt basis.
• B)$0 stock basis; $9,600 debt basis.
• C)$4,600 stock basis; $0 debt basis.
• D)$9,600 stock basis; $0 debt basis.
• E)None of the choices are correct.

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Definitions:

First-Assignment-In-Time Rule

A principle in law that gives priority to the party that first received the property or asset, often used in disputes over claims or ownership.

Emotional Intelligence

An ability to understand emotions and manage relationships effectively.

Contagious Emotions

The phenomenon where emotions experienced by one person can spread to others in their vicinity, affecting the overall mood and behavior.

Emotional Intelligence

The capacity to be aware of, control, and express one's emotions, and to handle interpersonal relationships judiciously and empathetically.