During the year, an S corporation incurs a $100,000 net operating loss. Maggie, the sole shareholder, has a $65,000 stock basis, and there is a $75,000 balance in AAA at the beginning of the year. Which statement is correct? a. Maggie may show a $100,000 loss deduction on her Form 1040. b. At the end of the year, there is a zero basis in both Maggie’s stock basis and the AAA. c. At the end of the year, Maggie has a zero basis in the stock, and there is a negative $25,000 balance in the AAA. d. Maggie may deduct $75,000 of the loss. e. None of the above

During the year, an S corporation incurs a $100,000 net operating loss. Maggie, the sole shareholder, has a $65,000 stock basis, and there is a $75,000 balance in AAA at the beginning of the year. Which statement is correct?

a. Maggie may show a $100,000 loss deduction on her Form 1040.

b. At the end of the year, there is a zero basis in both Maggie’s stock basis and the AAA.

c. At the end of the year, Maggie has a zero basis in the stock, and there is a negative $25,000 balance in the AAA.

d. Maggie may deduct $75,000 of the loss.

e. None of the above

 

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