Assignment Task: S corporation GVL Inc. had an ordinary business loss last tax year. At the beginning of the current tax year, Ben, a 50% shareholder, had zero basis and an unused loss carryover of $3,000. GVL recovered during the current tax year and reported on Schedule K (Form 1120- S) $10,000 net business income as well as a $1,000 Section 179 deduction on new equipment. Ben has $35,000 net income from other businesses during the current tax year.
This is a three-part question.
Question 1: What amount of ordinary loss from GVL Inc. can Ben deduct on his personal tax return?
Question 2: How much of the GVL loss must Ben carry over until his basis is reestablished?
Question 3: What is Ben's adjusted basis in GVL Inc. at the end of the current tax year?
a) $1,500; $1,500; $3,000
b) $3,000; $ 0; $1,500
c) $2,500; $ 500; $2,000
d) $2,000; $1,000; $2,500