Barrie owns 100% of a Subchapter S corporation and her basis in the stock is $200,000.In the current year,the corporation reports an ordinary loss of $250,000 and interest income of $20,000.How much of the loss can Barrie claim in the current year?

Question

Quizplus · Accepted Answer

Barrie can claim up to $220,000 of the loss in the current year. The reason for this is that her basis in the stock is only $200,000, but the corporation reported a loss of $250,000. However, she can also apply the interest income of $20,000 to her basis, bringing her total basis to $220,000. Therefore, she can claim the entire loss of $250,000, up to the amount of her increased basis.

Barrie Owns 100% of a Subchapter S Corporation and Her