Identify which of the following statements is true.

Question

Quizplus · Accepted Answer

Choice A is false because an S corporation shareholder can only increase the adjusted basis of his/her stock by any indebtedness owed the shareholder by the S corporation if the shareholder is at risk for the debt. Choice B is false because the overall S corporation loss limitation equals the shareholder's adjusted basis for his/her S corporation stock PLUS any loans the shareholder made to the S corporation. Choice C is true, as the loss pass-throughs from an S corporation may produce a net operating loss for the shareholder, which can be used to offset other income. Choice D is incorrect because Choice C is true.

Identify Which of the Following Statements Is True