Suppose at the beginning of 2017, Jamaal's basis in his S corporation stock was $27,000 and that Jamaal has directly loaned the S corporation $10,000. During 2017, the S corporation reported an $80,000 ordinary business loss and no separately stated items. After any loss deductions this year, what is Jamaal's stock and debt basis at the end of the year if Jamaal is a 50% shareholder of the S corporation?
A) $67,000 stock basis; $10,000 debt basis.
B) -$13,000 stock basis; $10,000 debt basis.
C) $27,000 stock basis; 10,000 debt basis.
D) $0 stock basis; $10,000 debt basis.
E) None of the choices are correct.
Correct Answer:
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