Question
13. Joe invests $10,000 cash for 15% of the stock in a new calendar-year S corporation that leases commercial real estate. (The $10,000 consists of
13. Joe invests $10,000 cash for 15% of the stock in a new calendar-year S corporation that leases commercial real estate. (The $10,000 consists of $6,000 from his personal savings and $4,000 he borrowed from Jane, a 25% shareholder in the company.) If Joe is allocated an $11,000 pass-through loss in the first year of operation, his basis limitation restricts his deductible loss to:
A. $10,000 .
B. $6,000
C. $0 14.
14. The at-risk rules then limit his deductible loss to:
A. $0
B. $6,000
C. $10,000
15. If Joe does not materially participate in the company's activities, what is his loss in accordance with the PAL rules?
A. $11,000
B. $0
C. $6,000
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