Question

Lena Tucker contributed $20,000 in cash and land with an adjusted basis of $100,000 and a fair market value of $140,000 to a newly formed corporation in return for 1,000 shares of stock in the corporation. During Year 1, Lena’s pro rata share of the corporation's separately and nonseparately stated items of income was $40,000 (including $5,000 of tax-exempt interest), and her pro rata share of the corporation's separately stated items of loss and deductions was $80,000. During the year she received distributions totaling $30,000. What is her adjusted basis in the 1,000 shares of stock?

***I answered this part and got $30,000 as the adjusted cost of stock.

Same facts as in the previous problem. In Year 2, Lena's pro rata share of income is $30,000, and her pro rata share of separately stated items of loss and deductions is $70,000. She received distributions totaling $25,000 during the year. What amount of separately stated losses and deductions may Lena deduct for the year? What would happen if Lena loans the company $20,000 during the year?

Answer 1

Soution Ls cons l0re Add . :-le- ovest munts - Less- t a 120,000

Depreciation $80000-+/30,000 taacoo : - 3900O dujked cost of stok: 12010 S30 000