Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is

Question:

Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $32,000. During the year, Sharrod’s share of a Kaiwan long-term capital gain (LTCG) is $5,000, and his share of an ordinary loss is $18,000. Sharrod then receives a $20,000 cash distribution. Compute the following.

a. Sharrod’s deductible loss.

b. Sharrod’s suspended loss.

c. Sharrod’s new basis in the Kaiwan stock.