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

question 150

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 $16,000 loan he made to the S corporation, and he has a $11,000 suspended loss from the S corporation. In 2020, Jamaal contributed $14,000 to the S corporation, and the S corporation had ordinary income of $10,000. 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) $10,000 income
• B) $4,000 income
• C) $1,000 loss
• D) $7,000 loss
• E) None of the choices are correct.