Jeff Owns 50% of an S Corporation's Stock with a Basis

question 96

Essay

Jeff owns 50% of an S corporation's stock with a basis in his stock of $50,000 on January 1. In addition, the S corporation owes Jeff $30,000 on January 1. The debt has a basis of $30,000 and is evidenced by a note. The S corporation reports an ordinary loss of $150,000 for the current year. The next year, it reports ordinary income of $20,000. On January 1 of the third year, the note is repaid. Due to the repayment of the note, Jeff must report what?

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Definitions:

Liver

A vital organ involved in numerous metabolic processes, including detoxification, protein synthesis, and the production of biochemicals necessary for digestion.

Iodine

A chemical element (I) that is a dark-gray or purplish-black solid at room temperature and is used in nutrition, medicine, and photography.

Mordant

A substance used in dyeing and printing that fixes dyes to fabrics by forming an insoluble compound with the dye.

Host Organism

An organism that provides nourishment and shelter to a parasite or another organism residing within it.