Suppose at the Beginning of 2014, Jamaal's Basis in His

question 107

Multiple Choice

Suppose at the beginning of 2014, 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 2014, 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 2014?

• 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 these.

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Definitions:

Government Spending

The total amount of money expended by a government on various sectors, including infrastructure, education, defense, and social services.

Net Exports

The difference between a country's total exports of goods and services and its total imports of goods and services over a specified period.

Samuelson

Refers to Paul Samuelson, a prominent economist known for his contributions to many fields of economics.

Solow

Refers to the Solow-Swan model, an economic model of long-term economic growth set within the framework of neoclassical economics that illustrates how a country's level of capital stock, labor force, and technology can affect its total output or GDP.