Suppose at the Beginning of 2016, Jamaal's Basis in His

question 46

Multiple Choice

Suppose at the beginning of 2016, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has loaned the S corporation $10,000. During 2016, the S corporation reported an $80,000 ordinary business loss and no separately stated items. After any loss deductions this year, what is Jamaal's stock and debt basis at the end of the year if Jamaal is a 50% shareholder of the S corporation?

• A) $27,000 stock basis; 10,000 debt basis.
• B) $0 stock basis; $10,000 debt basis.
• C) $67,000 stock basis; $10,000 debt basis.
• D)-$13,000 stock basis; $10,000 debt basis.
• E)None of these

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Definitions:

Loans

A sum of money that is borrowed and is expected to be paid back with interest.

Democratic Allies

Nations or groups that share and support democratic values and principles, often working together on international issues.

Soviet Union

A former federative socialist state in Eurasia that existed from 1922 to 1991, known officially as the Union of Soviet Socialist Republics (USSR).

Communist-Allied

Referring to entities, organizations, or countries that are aligned with or support Communist ideologies or parties.