An electing S corporation has a $30,000 ordinary loss for the nonleap year. On January 1, Beverly and Sonya own equally all of the S corporation stock. On the 146th day of the year, Beverly gives her one-half of the S corporation stock to her daughter Becky. How much of the $30,000 ordinary loss is allocated to Beverly?

Question

Quizplus · Accepted Answer

The loss is allocated based on the number of days each shareholder owns the stock. Beverly owned her shares for 145 days, so her share of the loss is ($30,000 * 145/365) / 2 = $6,000.

An Electing S Corporation Has a $30,000 Ordinary Loss for the Nonleap