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Aleks [24]
3 years ago
14

On January 2, 2016, Tim loans his S corporation $10,000. By the end of 2018, Tim's stock basis is zero, and the basis in his not

e has been reduced to $8,000. During 2019, the company's operating income is $10,000. The company makes 2019 distributions to Tim of $8,000. Tim reports a(n):
a. $2,000 LTCG.
b. $8,000 LTCG.
c. Stock basis of $2,000.
d. Loan basis of $10,000.
Business
1 answer:
UNO [17]3 years ago
8 0

Answer:

Option B is correct one.

<u>$8,000 LTCG</u>

Explanation:

The company makes 2019 distributions to Tim of $8,000. Tim reports a(n) <u>$8,000 LTCG.</u>

It is held more than one year. LTCG will be the distribution over the stock basis. Here the stock basis is 0.

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