Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $55,000. During the year, Sharrod's share of a Kaiwan long-term capital gain (LTCG) is $8,250, and his share of an ordinary loss is $33,275. Sharrod then receives a $33,000 cash distribution. Compute the following.

a. Sharrod's deductible loss.
b. Sharrod's suspended loss.
c. Sharrod's new basis in the Kaiwan stock.

Respuesta :

Answer: See explanation

Explanation:

a. Sharrod's deductible loss.

= Beginning stock + Long term capital gain - Cash distribution

= $55000 + $8250 - $33000

= $30250

b. Sharrod's suspended loss.

Beginning stock + Long term capital gain - Ordinary loss - Cash distribution

= $55000 + $8250 - $33,275 - $33000

= -$3025

c. Sharrod's new basis in the Kaiwan stock.

Sharrod's new basis in the Kaiwan stock is 0.