Suppose at the beginning of 2017,Jamaal's basis in his S corporation stock is $0,he has a $0 debt basis associated with a $10,000 loan he made to the S corporation and a $5,000 suspended loss from the S corporation.In 2017,Jamaal contributed $8,000 to the S corporation,and the S corporation had ordinary income of $4,000.Assume that Jamaal owns 40% of the S corporation.How much net income or loss does Jamaal report this year from the S corporation?
A) $4,000 income.
B) $1,600 income.
C) $1,000 loss.
D) $3,400 loss.
E) None of the choices are correct.
Correct Answer:
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