Suppose at the Beginning of 2018, Jamaal's Basis in His

Multiple Choice

Suppose at the beginning of 2018, 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 a $5,000 suspended loss from the S corporation. In 2018, Jamaal contributed $8,000 to the S corporation, and the S corporation had ordinary income of $4,000. Assume that Jamaal owns 40% 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.