Suppose at the beginning of 2017, Jamaal's basis in his S corporation stock is $1,000, and he has a $10,000 debt basis associated with a $10,000 loan he made to the Scorporation. In 2017, Jamaal's share of S corporation income is $4,000, and he received a$7,000 distribution from the S corporation. What is Jamaal's stock and debt basis after these transactions?
A) $0 stock basis; $10,000 debt basis.
B) $0 stock basis; $8,000 debt basis.
C) $5,000 stock basis; $3,000 debt basis.
D) $5,000 stock basis; $10,000 debt basis.
E) None of the choices are correct.
Correct Answer:
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