Suppose Clampett, Incorporated, Terminated Its S Election on August 28

question 71

Multiple Choice

Suppose Clampett, Incorporated, terminated its S election on August 28, 2020. At the end of the S corporation's short tax year ending on August 28, J.D.'s stock basis and at-risk amounts were both zero (he has never had debt basis) , and he had a suspended loss of $20,000. In 2021, J.D. made additional capital contributions of $5,000 on March 15 and $12,000 on September 5. How much loss may J.D. deduct in 2021?

• A)$0
• B)$5,000
• C)$17,000
• D)$20,000
• E)None of the choices are correct.

---

Definitions:

Market Rate

The prevailing interest rate or price available in the marketplace for goods, services, or securities.

Annual Dividend

The total amount of dividends a company pays out to its shareholders in one year.

Annual Dividend

The total dividend paid by a company to its shareholders in a year, often divided into quarterly payments.

Required Rate

The minimum annual percentage return that an investment must yield to an investor to consider it a viable option.