Jeff, a 52 owner of an S corporation, has a stock basis of zero at the beginning of the year Jeff 's basis in a $10,000 loan made to the corporation and evidenced by a corporate note has been reduced to zero by pass through losses During the year, his net share of the corporate taxable income is $1...

Section 1367b2B indicates that only the net incre ...

Jeff, a 52% owner of an S corporation, has a stock basis of zero at the beginning

Question:

Jeff, a 52% owner of an S has a stock basis of zero at the beginning of the year. Jeff's basis in a $10,000 loan made to the and evidenced by a corporate note has been reduced to zero by pass-through losses. During the year, his net share of the corporate taxable income is $11,000. At the end of the year, Jeff receives a $15,000 cash distribution. Discuss the tax effects of the distribution.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...