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15 February, 18:05

Fox Corp., an S corporation, had an ordinary loss of $36,500 for the year ended December 31, year 2. At January 1, year 2, Duffy owned 50% of Fox's stock. Duffy held the stock for 40 days in year 2 before selling the entire 50% interest to an unrelated third party. Duffy's basis for the stock was $10,000. Duffy was a full-time employee of Fox until the stock was sold. Duffy's share of Fox's loss was:

a) $0

b) $2,000

c) $10,000

d) $18,250

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Answers (1)
  1. 15 February, 20:37
    0
    b) $2,000

    Explanation:

    Duffy's share of Fox's loss = $36,500*50%*40/365

    = $2,000
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