In Applying the Basis Limitation on the Deduction of S

question 88

Multiple Choice

In applying the basis limitation on the deduction of S corporation losses,which of the following statements is true?

• A)The basis of a shareholder's interest in an S corporation,for purposes of limiting deductibility of losses,is computed in the same manner as a partner's basis in a partnership interest.
• B)A shareholder is permitted to deduct losses against basis in any debt obligation from the S corporation to the shareholder.
• C)If a shareholder's tax basis in a debt obligation is reduced,any gain resulting from the repayment of that obligation is considered ordinary income.
• D)All of the above statements are false.

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Definitions:

Preschoolers

Young children typically between the ages of 3 and 5 years old who are in early childhood, just before the start of formal education.

Social Interactions

The process by which individuals act and react in relation to others in a social context.

Cliques

refers to small, exclusive groups of individuals, often within a larger community, bound together by common interests or social standings.

Reference Groups

Groups of people with whom one compares oneself.