Question: On January 2 , 2 0 1 9 , David loans his S corporation $ 1 0 , 0 0 0 . By the end

On January 2,2019, David loans his S corporation $10,000. By the end of 2019 Davids stock basis is zero and the basis in his note has been reduced to $8,000. During 2020, the companys operating income is $10,000. The company makes 2020 distributions to David of $11,000. David reports a(n):
a. $1,000 LTCG.
b. $3,000 LTCG.
c. $11,000 LTCG.
d. Loan basis of $10,000.

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