Question 1 which statement is falsea stock basis may not go

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Reference no: EM13349300

Question :

1. Which statement is false?

a. stock basis may not go below zero

b. AAA may not go below zero

c.Losses are allocated on a daily basis to all shareholders

d. the AAA may be greater than stock basis

2.King Corporation an S corporation, is 50% owned by Crystal. on January 1,2012, Crystal's basis for King stock is $30,000. During the year, King had an ordinary loss of $30,000, tax-exempt income of $18,000, dividend income from domestic corporations of $10,000, a long-term capital loss of $20,000, and a short-term capital loss $8,000. Crystal's basis for the King stock at the beginning of 2012 is:

a.$0

b.$6,000

c.$15,000

d.$27,000

3. A calender year S corporation (without earnings and profits) incurred an ordinary loss of $20,000 for 2011. Its sole calendar-year shareholder had a stock basis of $10,000 and debt with a basis of $15,000 at the beginning of 2011. The S corporation had an ordinary income of $15,000 for 2012 and distributed $10,000 to its shareholder during 2012. As a result, what is the shareholder's debt basis at January 1,3012?

a.$5000

b.$10,000

c.$15,000

d.$20,000

Reference no: EM13349300

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