Suppose at the Beginning of 2018, Jamaal's Basis in His

question 105

Multiple Choice

Suppose at the beginning of 2018, Jamaal's basis in his S corporation stock is $1,000, and he has a $10,000 debt basis associated with a $10,000 loan he made to the S corporation. In 2018, Jamaal's share of S corporation income is $4,000, and he received a $7,000 distribution from the S corporation. What is Jamaal's stock and debt basis after these transactions?

• A) $0 stock basis; $8,000 debt basis.
• B) $0 stock basis; $10,000 debt basis.
• C) $5,000 stock basis; $10,000 debt basis.
• D) $5,000 stock basis; $3,000 debt basis.
• E) None of the choices are correct.

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