Corbin has a $15,000 basis in his 50 percent ownership in an S corporation and loaned the corporation $5,000 last year.The corporation has $30,000 of other debt.This year the corporation reported a $100,000 loss.How much of this loss may Corbin deduct this year?
A)$15,000
B)$20,000
C)$35,000
D)$50,000

Question

Quizplus · Accepted Answer

Corbin can deduct up to the amount of his basis in the S corporation plus any direct loans he has made to the corporation. His basis is $15,000, and he loaned the corporation $5,000, totaling $20,000. The $30,000 of other debt does not increase his basis because it is not directly loaned by him.

Corbin Has a $15,000 Basis in His 50 Percent Ownership