Business Entity Class

An S corporation incurs a total net loss from operations of $25,000 in the current year and makes no distributions. Its sole shareholder, K, has a basis in her S corporation stock of $30,000 and in a note receivable from the corporation of $20,000. The $25,000 has the following impact: a. None, since no distributions were made. b. Reduces the stock basis by $25,000. c. Reduces the note basis by $20,000 and the stock basis by $5,000. d. Reduces the note basis by $10,000 and the stock basis by $15,000