Raina owns 100% of Tribo Inc., an S corporation. She started the business this year with a $100,000 capital contribution. In addition, the business borrowed $50,000 from the bank which she had to guarantee. Tribo incurred a first year operating loss of $170,000. Raina will deduct an ordinarly loss this year of
A)$170,000.
B)$100,000.
C)$150,000.
D)$0.

Question

Quizplus · Accepted Answer

Raina can only deduct losses up to her basis in the S corporation, which is her capital contribution of $100,000. The loan guaranteed by her does not increase her basis for loss deduction purposes.

Raina Owns 100% of Tribo Inc