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

question 19

Multiple Choice

Suppose at the beginning of 2018, Jamaal's basis in his S corporation stock is $0, he has a $0 debt basis associated with a $10,000 loan he made to the S corporation and a $5,000 suspended loss from the S corporation. In 2018, Jamaal contributed $8,000 to the S corporation, and the S corporation had ordinary income of $4,000. Assume that Jamaal owns 40% of the S corporation. What is Jamaal's stock and debt basis at the end of 2018?

• A) $0 stock basis; $4,600 debt basis.
• B) $0 stock basis; $9,600 debt basis.
• C) $4,600 stock basis; $0 debt basis.
• D) $9,600 stock basis; $0 debt basis.
• E) None of the choices are correct.

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