S Corporation incurred a business loss of $25,000 in the current year and made no distributions. Sole shareholder A had a stock basis of $30,000 and a $20,000 basis in a direct loan made to the S Corporation. The $25,000 loss has the following impact: None, since no distributions were made. Reduces stock basis by $25,000. Reduces loan basis by $20,000 and stock basis by $5,000. Reduces loan basis by $10,000 and stock basis by $15,000.
S Corporation incurred a business loss of $25,000 in the current year and made no distributions. Sole shareholder A had a stock basis of $30,000 and a $20,000 basis in a direct loan made to the S Corporation. The $25,000 loss has the following impact: None, since no distributions were made. Reduces stock basis by $25,000. Reduces loan basis by $20,000 and stock basis by $5,000. Reduces loan basis by $10,000 and stock basis by $15,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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S Corporation incurred a business loss of $25,000 in the current year and made no distributions. Sole shareholder A had a stock basis of $30,000 and a $20,000 basis in a direct loan made to the
S Corporation. The $25,000 loss has the following impact:
-
- None, since no distributions were made.
- Reduces stock basis by $25,000.
- Reduces loan basis by $20,000 and stock basis by $5,000.
- Reduces loan basis by $10,000 and stock basis by $15,000.
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