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.What is Jamaal's stock and debt basis at the end of 2017?
A) $0 stock basis; $4,600 debt basis.
B) $0 stock basis; $9,600 debt basis.
C) $4,600 stock basis; $0 debt basis.
D) $9,600 stock basis; $0 debt basis.
E) None of the choices are correct.
Correct Answer:
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