On January 1, 2019, Laura Wang contributed $30,000 cash in exchange for 30 shares of stock in Suki Inc., an S corporation. On May 12, Laura loaned $8,500 to Suki in exchange for a 5-year interest-bearing note. Laura's pro rata share of Suki's 2019 ordinary business loss was $34,100, and she received no cash distributions during the year. Assume the excess business loss limitation does not apply. Which of the following statements is accurate?
A. Laura can deduct $30,000 of the loss in 2019. On January 1, 2020, the basis in her Suki stock is zero, and the basis in her Suki note is $8,500.
B. Laura can deduct $34,100 of the loss in 2019. On January 1, 2020, the basis in her Suki stock is zero, and the basis in her Suki note is $4,400.
C. Laura can deduct $34,100 of the loss in 2019. On January 1, 2020, the basis in her Suki stock is $4,400, and the basis in her Suki note is zero.
D. None of the above is accurate.
Answer: B
You might also like to view...
Which of the following physically prepare and audit financial reports?
A) Accountants B) Managers C) Chief executives D) Board of directors
1. $7,000 of merchandise inventory was ordered on September 2, 2009 2. $3,000 of this merchandise was received on September 5, 2009 3. On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received. 4. On September 10, 2009, $800 of the merchandise was returned to the seller. Based on the above information,
what would be recorded as net purchases amount after all of the transactions have been recorded? A) $2,200 B) $2,134 C) $2,450 D) $2,384
If net income is $40,000, and other income is $5,000, then the income from operations total must be $35,000
Indicate whether the statement is true or false
Accounts that are closed include expenses, dividends, and unearned revenues.
Answer the following statement true (T) or false (F)