How does this income affect m basis in the stock

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Question - Net Income/Loss and Basis - For the current year, an S corporation reported an ordinary loss of $100,000, a net capital loss of $10,000, and a $ 1231 gain of $20,000. M owns 10% of the stock and at the beginning of the year had a basis in her stock of $7,500. In addition, M loaned the corporation $5,000 during the year. She materially participates in the S corporation.

a. Compute her deductible loss.

b. The following year, the corporation reported ordinary income of $70,000 and made no distributions. How does this income affect M's basis in the stock and the debt?

Reference no: EM133126381

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