Problem: Jeff owns 50% of an S corporation's stock with a basis in his stock of $50,000 on January 1. In addition, the S corporation owes Jeff $30,000 on January 1. Jeff's share of the S corporation's ordinary loss is $75,000 for the current year. Jeff's share of the S corporation's ordinary income next year is $10,000. On December 31 of this second year, the note is repaid. Due to the repayment of the note, Jeff must report
Group of answer choices
- No gain or loss.
- $15,000 long-term capital gain.
- $30,000 long-term capital gain.
- None of the above.