Suppose that at the beginning of 2019 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 he has a $5,000 suspended loss from the S corporation.In 2019, Jamaal contributed $8,000 to the S corporation, and the S corporation had ordinary income of $4,000.Assume that Jamaal owns 40 percent of the S corporation.What is Jamaal's stock and debt basis at the end of 2019?

Question

Quizplus · Accepted Answer

Jamaal's stock basis is $0 because he has no basis in his S corporation stock at the beginning of the year and he does not contribute any additional capital to the S corporation during the year. Jamaal's debt basis is $4,600 because he has a $10,000 loan to the S corporation and he contributes $8,000 to the S corporation during the year.

Suppose That at the Beginning of 2019 Jamaal's Basis in His