On January 1, Leon Purchased a 10% Stock Interest in an S

question 61

Multiple Choice

On January 1, Leon purchased a 10% stock interest in an S corporation for $30,000. He also loaned the S corporation $5,000 in exchange for a written promissory note. The S corporation generated a $330,000 operating loss for the year. Leon deducted his 10% share of the loss, reducing his tax basis in his stock to zero, and his tax basis in the note to $2,000. The following year, the S corporation repaid the note before Leon restored his basis in the note. What are the consequences of the loan repayment to Leon?

• A) $3,000 capital gain
• B) $3,000 ordinary income
• C) $2,000 capital gain
• D) $2,000 ordinary income

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Definitions:

Oxygen-Conserving Devices (OCDs)

Devices designed to enhance the efficiency of oxygen delivery, extending the use time of oxygen supplies for patients.

Expiratory Phase

The part of the breathing cycle when air is expelled from the lungs.

Chamber

A compartment or enclosed space, used in various contexts such as part of a firearm, heart, or device.

Mean Oral Temperature

The average temperature taken from the mouth, which reflects the body's core temperature, commonly used in clinical assessments.