At the beginning of the current year, Corporation M had a $50,000 basis in its 50% interest
Question:
At the beginning of the current year, Corporation M had a $50,000 basis in its 50% interest in the M&N Partnership. For the year, M&N incurred a $168,000 net operating loss and received $20,000 of dividend income. M’s share of the partnership’s debts decreased by $6,000 the year. The partnership made no distributions to its partners. Based on these facts, what amount of M&N’s net operating loss may M recognize during the current year?
a. $44,000 ordinary loss
b. $50,000 ordinary loss
c. $64,000 ordinary loss
d. $70,000 ordinary loss
An S corporation shareholder's basis may be affected by some or all business liabilities
a. Never
b. Because the basis is increased by the amount of debt directly owed by the S corporation to the particular shareholder when there is a net loss allocated to that shareholder
c. Because the basis is increased by the shareholder's share of all business liabilities
d. When there is AEP from C corporation years
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren