Shelley Owns a 25% Interest in a Qualifying S Corporation

question 41

Essay

Shelley owns a 25% interest in a qualifying S corporation.Shelley's basis in the stock was $15,000 at the beginning of the year.Shelley made no capital contributions and received no distributions during the year.Shelley loaned the S corporation $20,000 this year.The S corporation incurred a $160,000 ordinary loss this year.
a.What are the amounts of Shelley's deduction and carryover of the unused loss for the year?
b.What is the amount of Shelley's basis in the stock at the end of year one?
c.If the S Corporation earned net income of $200,000 in year two,what is the amount of Shelley's stock basis at the end of year two?

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Definitions:

Survey Research

Research methods obtaining information directly from a group of people regarding their opinions, beliefs, or behavior.

Non-experimental Research

Observational research in which the researcher does not actively manipulate variables but observes natural occurrences.

Opinions, Beliefs, Behaviors

Individual or collective attitudes, convictions, and actions that reflect personal or group values, perspectives, and conduct.

Statistics

The science of collecting, analyzing, interpreting, and presenting data.