Anna is a 20% shareholder in an S corporation. Anna acquired her interest on January 1...
Anna is a 20% shareholder in an S corporation. Anna acquired her interest on January 1 of the current year by investing $10,000 for 20% of the corporation’s stock. In March, the corporation took out a bank loan for $100,000. The corporation reported a net loss for the current year of $200,000. How much of this loss can Anna deduct on her current year’s tax return?
$40,000
$30,000
$20,000
$10,000
Homework Answers
Step:- 1 percentage of share holding = 20%
Amount Invested in shares = $10,000
Company net loss for the year = $2,00,000
Step:- 2 Anna can deduct loss for the current year as follows
Total Loss = $2,00,000
Percentage of share holding = 20%
Loss for Anna's share = $2,00,000×20/100 = $40,000.
Conclusion:- Therefore Anna deduct the loss in his income tax return was about $40,000.
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