1. Jim owns all of the stock of Baja, Inc. a calendar-year S corporation. Jim materially participates in Bajas business. Jims stock basis at the beginning of the current year is $15,000. He also loaned $30,000 to Baja during the year. Baja repaid $5,000 of the loan by the end of the year. During the current year Baja had an ordinary loss of $50,000. No distributions or other items of income or loss are reported. How much loss may Jim deduct for the current year?

$0.

$15,000.

$40,000.

$50,000. 2. George owns all of the stock of Patent, Inc. a calendar-year S corporation. There are no suspended losses. His stock basis at the end of the current year but before the items below is zero. During the year George made a $10,000 capital contribution. There are no loans. During the current year Patent has no income or loss from operations and it made no distributions. Which of the following is most accurate regarding Georges end of year consequences?

George has stock basis of zero.

George has a $10,000 stock basis.

George has income of $10,000.

George has income of $10,000 and stock basis of $10,000.

3. Johnny owns all of the stock of Quest, Inc. a calendar-year S corporation. There are no suspended losses. His stock basis at the end of the current year but before the items below is $10,000. At the end of the current year Johnny has a loan balance that Quest owes him of $15,000 but Quest made no loan repayments during the year. During the current year Quest has no income or loss from operations. Quest distributed $40,000 to Johnny during the current year. The consequences to Johnny for the current year are

Capital Stock Debt Gain Basis Basis

$ 0. $ 0 $ 0

Capital Stock Debt Gain Basis Basis

$10,000. $ 0 $ 0

Capital Stock Debt Gain Basis Basis

$30,000. $ 0 $ 15,000

Capital Stock Debt Gain Basis Basis

$40,000. $ 10,000 $ 15,000