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A calendar year S corporation had dividend income of $10,000 and a net ordinary loss of $70,000 for

A calendar year S corporation had dividend income of $10,000 and a net ordinary loss of $70,000 for

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A calendar year S corporation had dividend income of $10,000 and a net ordinary loss of $70,000 for the current year. At the beginning of the year, Z, a 40 percent shareholder, has a stock basis of $15,000 and a note basis (on a loan Z made to the corporation) of $6,000. Z also personally guaranteed payment of a $5,000 loan that the corporation took out. Z's only other income is a substantial salary from an unrelated business. Z materially participates in the S corporation business. What is Z's stock basis and loan basis at the end of the current year?
Transcribed Image Text:A calendar year S corporation had dividend income of $10,000 and a net ordinary loss of $70,000 for the current year. At the beginning of the year, Z, a 40 percent shareholder, has a stock basis of $15,000 and a note basis (on a loan Z made to the corporation) of $6,000. Z also personally guaranteed payment of a $5,000 loan that the corporation took out. Z's only other income is a substantial salary from an unrelated business. Z materially participates in the S corporation business. What is Z's stock basis and loan basis at the end of the current year?
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