1. Riley, a 50% S corporation shareholder, began the year with stock basis of $100,000 and, during the year, directly loan the S corporation $50,000. Ordinary business loss for the year was $360,000. Early in the next tax year, the corporation paid back the $50,000 to Riley. Which statement about this payment is true?

   1. This is a non-taxable event to Riley

   2. Riley will recognize a $20,000 gain

   3. Riley will recognize a $30,000 gain

   4. Riley will recognize a $50,000 gain