8. Michael owns stock in XYZ Corporation. XYZ is an S corporation. Michaels basis in his stock was $5,000 at the beginning of this year. Michael guaranteed a bank note of $25,000 for the corporation in June of this year. Michaels share of the corporations ordinary loss at the end of the year is $35,000. How much of this loss will Michael be able to currently deduct on his personal tax return?

a) $30,000

b) $ 5,000

c) $35,000

d) $15,000

Sarah is a shareholder in an S Corporation. This is the third year in which she has been a shareholder. She purchased her stock (1,000 shares for $15.00 per share). Sarahs basis at the end of year two was $17,500. This year Sarah received a distribution of $10,000. The corporation suffered a loss this year; Sarahs share of the ordinary loss is $9,500. What is Sarahs basis in the corporation at the end of the year?

a) $17,500

b) $ 7,500

c) $ 8,000

d) $ 0