King Corporation, an electing S corporation, is 100% owned by Crystal. On January 1 of the current year, her adjusted basis in the King stock is $30,000. During the year, King reports an ordinary loss of $30,000, tax-exempt municipal bond income of $15,000, dividend income from domestic corporations of $5,000, a long-term capital loss of $20,000, and a short-term capital loss of $30,000. What is
Crystal's basis for the King stock at the end of the year?
What will be an ideal response?
Only $50,000 of the $80,000 total loss can be used, and the stock basis goes to $0. A $30,000 carryover is composed of ratable portions of each of the three types of losses.
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