Parker Is a 100% Shareholder of Johnson Corp

question 40

Essay

Parker is a 100% shareholder of Johnson Corp.(an S corporation).At the beginning of 2017,Parker's basis in his Johnson Corp.stock was $14,000.During 2017,Parker loaned $20,000 to Johnson Corp.and Johnson Corp.reported a $25,000 ordinary business loss and no separately stated items.In 2018,Johnson Corp.reported $8,000 of ordinary business income.
a.How much of the $25,000 ordinary loss allocated to Parker clears the tax basis hurdle for deductibility in 2017?
b.What is Parker's stock and debt basis at the end of 2017?
c.What is Parker's stock and debt basis at the end of 2018?

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Definitions:

Device Drivers

Software components that enable the operating system and applications to interact with hardware peripherals, such as keyboards, mice, and printers.

Operating System

A program that handles the management of both hardware and software assets of a computer, and delivers general services to various computer applications.

Restore

The action of returning a system or data to a previous state or condition, often from a backup.

Cooling Pad

a device used to reduce the operating temperature of electronic devices, notably laptops, by providing additional cooling.