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.How much of the ordinary loss is deductible by Jamaal if he owns 50% of the S corporation?

Question

Quizplus · Accepted Answer

Jamaal's basis at the end of 2017 can be calculated as:
Beginning basis + Share of ordinary loss - Loans to S corporation = Ending basis
$27,000 + (50% x $80,000) - $10,000 = $37,000
Since Jamaal's ending basis is greater than zero, he can deduct the entire share of the ordinary loss, which is $37,000.

Suppose at the Beginning of 2017,Jamaal's Basis in His S