Unsure how to figure loan basis. Any help would be greatly appreciated.
Tim has a zero basis in his S Corporation stock. A loan he has made to his S Corporation has a face value of $10,000, and its current basis is $3,000 (having previously been reduced by $7,000 of losses that he used). Tim's share of the corporation's current net income is $4,000.
a) What is his stock basis?
b) What is his loan basis?
c) Corporation pays $10,000 to Tim before he increases his basis. How would this payment be treated and what would be his loan basis.