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On January 2, 2018, Susan loans her S corporation $10,000. By the end of 2018, Susan’s...

On January 2, 2018, Susan loans her S corporation $10,000. By the end of 2018, Susan’s stock basis is zero, and the basis in her note has been reduced to $7,000 as a result of losses incurred during the year. During 2019, the company’s operating income is $10,000. The company makes no 2019 distributions to Susan and has no other earnings. At the beginning of 2020, Susan has a:

a.         Stock basis of $2,000.

b.         Stock basis of $10,000.

c.         Loan basis of $10,000.

d.         Loan basis of $7,000.

e.         Loan basis of $8,000.

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