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Supposethat at the Beginning of 2020 Jamaal's Basis in His

Question 82

Multiple Choice

Supposethat at the beginning of 2020 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 S corporation. In 2020, 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; $8,000 debt basis
B) $0 stock basis; $10,000 debt basis
C) $5,000 stock basis; $10,000 debt basis
D) $5,000 stock basis; $3,000 debt basis
E) None of the choices are correct.

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