Supposethat at the Beginning of 2020 Jamaal's Basis in His

Multiple Choice

Supposethat at the beginning of 2020 Jamaal's basis in his S corporation stock is $0, he has a $0 debt basis associated with a $10,000 loan he made to the S corporation, andhe has a $5,000 suspended loss from the S corporation. In 2020, Jamaal contributed $8,000 to the S corporation, and the S corporation had ordinary income of $4,000. Assume that Jamaal owns 40percent of the S corporation. How much net income or loss does Jamaal report this year from the S corporation?

A) $4,000 income
B) $1,600 income
C) $1,000 loss
D) $3,400 loss
E) None of the choices are correct.