McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 29

Chandra was the sole shareholder of Pet Emporium that was originally formed as an S corporation.When Pet Emporium terminated its S election on August 31, 2010, Chandra had a stock basis and an at-risk amount of zero.Chandra also had a suspended loss from Pet Emporium of $9,000.What
amount of the suspended loss is Chandra allowed to deduct, and what is her basis in her Pet Emporium stock at the end of the post-termination transition period under the following alternative scenarios (assume Pet Emporium files for an extension to file its tax returns)?
a.Chandra makes capital contributions of $7,000 on August 30, 2011, and $4,000 on September 14, 2011.b.Chandra makes capital contributions of $5,000 on September 1, 2011, and $5,000 on September 30, 2011.c.Chandra makes a capital contribution of $10,000 on August 31, 2011.d.Chandra makes a capital contribution of $10,000 on October 1, 2011.