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15. The sole shareholder of an S Corp is active in the business and has a basis of $5,000 in the stock. The shareholder also

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Answer #1

Answer to (a)

As per tax law , sole proprietor can deduct any loss incurred from business and such loss can be deducted from non business income. Since S Crop is a Sole proprietorship concern so he can deduct loss of $7000 against the non business income but in the given case income from non business is not mention therfore it will be carry forward to next year to set off.

Answer to (b)

Shareholder's basis at the begining of the next year will be -$2000.

Answer to (c)

Shareholder's basis at the begining after earning of $300 will be -$1700.

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