Suppose at the beginning of 2018, Jamaal's basis in his S corporation stock is $1,000, and he has a $10,000 debt basis associated with a $10,000 loan he made to the S corporation. In 2018, Jamaal's share of S corporation income is $4,000, and he received a $7,000 distribution from the S corporation. What is Jamaal's stock and debt basis after these transactions?

Multiple Choice

• $0 stock basis; $8,000 debt basis.
• $0 stock basis; $10,000 debt basis.
• $5,000 stock basis; $10,000 debt basis.
• $5,000 stock basis; $3,000 debt basis.
• None of the choices are correct.