Jenna owns stock in an S corporation which sustained a net operating loss during the year. Her share of the loss is $5,000. Her adjusted basis in the stock is $1,000. She also loaned the corp. $2,000 which remains outstanding. What amount if any, is she entitled to deduct with respect to the loss?

a. (a) $5,000

b. (b) $3,000

c. (c) $2,000

d. (d) $1,000 e. (

e) none of the above

Question 2

Which of the following is not a separately stated item in the income computation of an S corporation?

a. long term capital gain

b. charitable contribution

c. interest income

d. section 179

e. general business credit

Question 3

A calendar year S corp has a $36,500 operating loss for year 1. At the beginning of year 1, S corp had two equal shareholders A and B. On May 31, year 1, A sells his shares of stock in the S corp. How much of the $36,000 loss is allocable to

A. a. $0

b. $4,167

c. $7,550

\d. $7,604

e. $15,100

Question 4

Cathy Smith sold her 20% interest in an S corp on April 30. On November 30, the corporation, which is on a calendar year basis for tax purposes, sold land with an adjusted basis of $30,000 for $84,750. The corp. income from business operations was $109,500, of which $30,000 was earned while she held the stock of the corp. What is Cathy's share of the capital gain and income from business operations? No elections have been filed by the S corp.

a. $0 capital gain and $6,000 ordinary income

b. $0 capital gain and $7,200 of ordinary income

c. $3,600 of capital gain and $6,000 of ordinary income

d. $3,600 of capital gain and $7,200 of ordinary income

Question 5

A shareholders adjusted basis in stock is used to determine

a. the extent to which a distribution made by the corp to the shareholder is taxable.

b. the amount of losses that shareholders may deduct in a given year.

c. the shareholder's realized gain or loss upon the sale or exchange of stock.

d. all of the above.