Suppose That at the Beginning of 2020 Jamaal's Basis in His

question 4

Multiple Choice

Suppose that at the beginning of 2020 Jamaal's basis in his S corporation stock is $0, he has a $0 debt basis associated with a $16,500 loan he made to the S corporation, and he has a $11,500 suspended loss from the S corporation. In 2020, Jamaal contributed $14,500 to the S corporation, and the S corporation had ordinary income of $10,500. Assume that Jamaal owns 40percent of the S corporation. How much net income or loss does Jamaal report this year from the S corporation?

• A)$10,500 income
• B)$4,200 income
• C)$1,000 loss
• D)$7,300 loss
• E)None of the choices are correct.

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Definitions:

Outgroup Homogeneity

The perception that members of an outgroup are more similar to each other than they actually are, often attributed to a lack of personal familiarity.

Group Attribution

The tendency to ascribe certain qualities, behaviors, or outcomes to a group as a whole, rather than to its individual members.

Ingroup Differentiation

Refers to the process by which members of a group distinguish themselves from other members in the same group based on roles, tasks, or characteristics.

Law of Small Numbers

The law of small numbers is the cognitive bias that leads people to draw broad conclusions from a small set of data or experiences, potentially misrepresenting the larger picture.