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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18e45dfa-0e00-4310-8b8b-ba277107c244%2Ffe1c9ce4-982c-4cff-837a-44cee3c21def%2Ftq14v4_processed.png&w=3840&q=75)
Transcribed Image Text: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
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