Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas's basis in a $33,200 loan made to Ard and evidenced by Ard's note has been reduced to $0 by prior losses. During the year, Jonas's net share of Ard's taxable income is $16,600. At the end of the year, Ard makes a $24,900 cash distribution to Jonas. After these transactions, what is Jonas's basis in his stock, and what is his basis in the debt? What is Jonas's recognized capital gain?

Question

Business

Misael

9 April, 18:32

Jonas is a 60% owner of Ard, an S corporation. At the beginning of the year, his stock basis is zero. Jonas's basis in a $33,200 loan made to Ard and evidenced by Ard's note has been reduced to $0 by prior losses. During the year, Jonas's net share of Ard's taxable income is $16,600. At the end of the year, Ard makes a $24,900 cash distribution to Jonas. After these transactions, what is Jonas's basis in his stock, and what is his basis in the debt? What is Jonas's recognized capital gain?

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Answers (1)

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Ronnie · Answer 1

Capital gain $24,900

Explanation:

Jonas's Stock basis $33,200

Less $8,300

Capital gain $24,900

$24,900 cash distribution - Net share of Ard's taxable income $16,600 = $8,300

Therefore Jonas's recognized capital gain

of $24,900