The shareholder claim on its income tax return

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Reference no: EM132195007

Please use the following fact pattern to answer THE questions . At the start of the year, the sole shareholder in an s-corporation has a basis of $80000 and debt basis of $40000. During the year, the S-corporation has a non-separately stated loss of $150000.

1. What is the maximum loss the shareholder claim on its income tax return?

A. 150000

B. 80000

C. 40000

D. 120000

E. 0

2. If the shareholder takes the maximum amount of loss on their income tax return, what is the shareholder’s stock and debt basis thereafter?

A. Stock Basis = 0 and Debt Basis = 0

B. Stock Basis = 0 and Debt Basis = 40000

C. Stock Basis = 0 and Debt Basis = (30000)

D. Stock Basis = (30000) and Debt Basis = 0

E. Stock Basis = 80000 and Debt Basis = 40000

Reference no: EM132195007

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