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How would this payment be treated

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Unsure how to figure loan basis. Any help would be greatly appreciated.

Tim has a zero basis in his S Corporation stock. A loan he has made to his S Corporation has a face value of $10,000, and its current basis is $3,000 (having previously been reduced by $7,000 of losses that he used). Tim's share of the corporation's current net income is $4,000.

a) What is his stock basis?

b) What is his loan basis?

c) Corporation pays $10,000 to Tim before he increases his basis. How would this payment be treated and what would be his loan basis.

Reference no: EM132084592

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