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

question 12

Multiple Choice

Suppose at the beginning of 2018, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has directly loaned the S corporation $10,000. During 2018, the S corporation reported an $80,000 ordinary business loss and no separately stated items. After any loss deductions this year, what is Jamaal's stock and debt basis at the end of the year if Jamaal is a 50% shareholder of the S corporation?

• A) $27,000 stock basis; 10,000 debt basis.
• B) $0 stock basis; $10,000 debt basis.
• C) $67,000 stock basis; $10,000 debt basis.
• D) -$13,000 stock basis; $10,000 debt basis.
• E) None of the choices are correct.

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Definitions:

Damage

Damage refers to the loss or injury suffered as a result of an act or omission, which may be subject to compensation in legal terms.

Agreement to Sell

A contractual arrangement where a seller agrees to transfer goods or services to a buyer at a future date, under specified conditions.

Contract to Sell

An agreement where one party promises to transfer ownership of goods or property to another upon the satisfaction of specified conditions.

Actual Title

The legal possession of property, evidenced by a deed or another legal document, as opposed to mere possession or use.