Question

Suppose at the beginning of 2010, jamaal's basis in his s corporation stock was $27,000 and that jamaal has loaned the s corporation $10,000. During 2010, the s corporation reported an $80,000 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by jamaal if he owns 50% of the s corporation?

a. $10,000.

b. $27,000.

c. $37,000.

d.

Answer 1

Answer:

C)

Explanation:

Losses are limited to stock basis ($27,000) plus debt basis ($10,000).