Katrina was an S corporation shareholder. After her initial contributions, she had the following tax bases: 1) Basis in stock: $50,000 2) Basis in personal loan to S corp: $20,000 Over the first two years of the corporation's existence, the corporation experienced significant operating losses and Katrina's pass- through share of these was $60,000. Katrina materially participated in the S corporation's business. Which of the following statements regarding Katrina's tax situation is false? These were deductible losses to Katrina Katrina could deduct only $50,000 of the pass through losses. The remaining $10,000 was suspended. After these losses, Katrina had a $0 basis in stock and a $10,000 basis in loan none of the above

Katrina was an S corporation shareholder. After her initial contributions, she had the following tax bases: 1) Basis in stock: $50,000 2) Basis in personal loan to S corp: $20,000 Over the first two years of the corporation's existence, the corporation experienced significant operating losses and Katrina's pass- through share of these was $60,000. Katrina materially participated in the S corporation's business. Which of the following statements regarding Katrina's tax situation is false? These were deductible losses to Katrina Katrina could deduct only $50,000 of the pass through losses. The remaining $10,000 was suspended. After these losses, Katrina had a $0 basis in stock and a $10,000 basis in loan none of the above

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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