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

question 154

Multiple Choice

Suppose that at the beginning of 2020 Jamaal's basis in his S corporation stock was $27,000 and Jamaal has directly loaned the S corporation $10,000. During 2020, the S corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50 percent of the S corporation?

• A)$10,000
• B)$27,000
• C)$37,000
• D)$40,000
• E)None of the choices are correct.

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Definitions:

Long-run Equilibrium

A market condition where all factors of production and inputs can be varied, allowing firms to enter or exit the market, ultimately resulting in no economic profit for any firm.

Demand

The amount of a product or service that buyers are ready and able to buy at different price levels over a certain timeframe.

Cost Function

A mathematical expression or equation that defines the cost of production as a function of output or other variables.

Long-run Equilibrium

A situation in which, over the long term, supply and demand are balanced, all firms are operating at an optimal scale, and economic forces are in balance.