A shareholder in an S corporation who makes a loan to the corporation, increases the basis in his stock investment.

Name: A shareholder in an S corporation who makes a loan to the corporation, increases the basis in his stock investment.
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Question

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The basis in the shareholder's stock investment is not increased by making a loan to the corporation. Instead, the shareholder increases their basis in the debt of the corporation, which is tracked separately from their stock basis.

A Shareholder in an S Corporation Who Makes a Loan