Question

Suppose that at the beginning of 2019 Jamaal's basis in his S corporation stock is $2,300 and he has a $11,300 debt basis associated with a $11,300 loan he made to the S corporation. In 2019, Jamaal's share of S corporation income is $5,300, and he received a $8,300 distribution from the S corporation. What is Jamaal's stock and debt basis after these transactions?

Answer 1

Answer:

Jamaal's stock basis              = Beginning of 2019 + Corporation Income (-) Received Distributions              =       $2,300 + $5,300 (-) $8,300              =       ($700)

Jamaal's stock basis (Should not be below Zero)     = $0

Jamaal's Debt basis    = $11,300

Stock basis - $0    ;    Debt basis   - $11,300