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, and he 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 40 percent of the S corporation. What is Jamaal's stock and debt basis at the end of 2020?

A) $0 stock basis; $4,600 debt basis
B) $0 stock basis; $9,600 debt basis
C) $4,600 stock basis; $0 debt basis
D) $9,600 stock basis; $0 debt basis
E) None of the choices are correct.