Kelly contributed $15,000 cash and tangible property with an adjusted basis of $12,000 and fair market value of $24,000 in exchange for 30 of the 100 outstanding shares of an S corporation. In Year 1, the S corporation entered into a recourse debt agreement for $36,000 and a nonrecourse debt agreement, secured by equipment of the S corporation, for $14,000. In the case of default on the recourse debt, each shareholder is protected by personal liability insurance. What is Kelly's at-risk limitation on losses?
Kelly contributed $15,000 cash and tangible property with an adjusted basis of $12,000 and fair market value of $24,000 in exchange for 30 of the 100 outstanding shares of an S corporation. In Year 1, the S corporation entered into a recourse debt agreement for $36,000 and a nonrecourse debt agreement, secured by equipment of the S corporation, for $14,000. In the case of default on the recourse debt, each shareholder is protected by personal liability insurance. What is Kelly's at-risk limitation on losses?
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 58P
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Transcribed Image Text:Kelly contributed $15,000 cash and tangible
property with an adjusted basis of $12,000
and fair market value of $24,000 in exchange
for 30 of the 100 outstanding shares of an Š
corporation. In Year 1, the S corporation
entered into a recourse debt agreement for
$36,000 and a nonrecourse debt agreement,
secured by equipment of the S corporation,
for $14,000. In the case of default on the
recourse debt, each shareholder is protected
by personal liability insurance. What is Kelly's
at-risk limitation on losses?
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