Chandra was the sole shareholder of Pet Emporium that was originally formed as a

Question

Chandra was the sole shareholder of Pet Emporium that was originally formed as an S corporation. When Pet Emporium terminated its S election on August 31, 2016, Chandra had a stock basis and an at-risk amount of $0. Chandra also had a suspended loss from Pet Emporium of $10,000.

What amount of the suspended loss is Chandra allowed to deduct, and what is her basis in her Pet Emporium stock at the end of the post-termination transition period under the following alternative scenarios (assume Pet Emporium files for an extension to file its tax returns)? (Leave no answer blank. Enter zero if applicable.)

a. Chandra makes capital contributions of $8,500 on August 30, 2017, and $5,200 on September 14, 2017.

Solve for stock basis

Explanation / Answer

a) Chandra Makes capital contributions of $ 8500 on Aug 30, 2017 and $ 5200 on Sep 14, 2017

total capital contributions = $ 8500 + $ 5200 = $ 13700

Chandra also had a suspended loss from pet emporium of $ 10000

This Reduce stock basis = Total Contribution - Suspended Loss

= $ 13700 - $ 10000 = $ 3700

Note : for the absortion of suspended loss chandra is allowee to make stock basis of the post transitional period.

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