On January 1, Bobby and Alice equally own all of the stock of an electing S corporation called Prairie Dirt Delight. The entity incurs a $60,000 loss for a nonleap year. On the 200th day of the year (not a leap year), Bobby sells his one-half of the stock to his son, Saul. How much of the $60,000 loss, if any, is allocated to Bobby?
A) $-0-
B) $13,562
C) $16,438
D) $32,877

Question

Quizplus · Accepted Answer

The loss is allocated based on the number of days each shareholder owns the stock. Bobby owned the stock for 199 days, so his share of the loss is (199/365) * $30,000 = $16,438.

On January 1, Bobby and Alice Equally Own All of the Stock