Question
On January 1, 2020, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS
On January 1, 2020, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2020. BLS generated $220,000 ordinary business income in 2020. In 2022, BLS repaid its $8,000 debt to Leo before he restored any basis in the debt.
A) How much gain or loss, if any, will Leo recognize as a result of the debt repayment?
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Sound Investing, Chapter 15 - Liability Tricks
Authors: Kate Mooney
2nd Edition
0071719377, 9780071719377
