A calendar year C corporation reports a $41,000 NOL in 2017, but it elects S status for 2018 and generates an NOL of $30,000 in that year. At all times during 2018, the stock of the corporation was owned by the same 10 shareholders, each of whom owned 10% of the stock. Kris, one of the 10 shareholders, holds an S stock basis of $2,300 at the beginning of 2018 . How much of the 2018 loss, if any,

is deductible by Kris?
a. $0
b. $2,300
c. $3,000
d. $7,100

b
RATIONALE: The 2017 NOL of $41,000 generally is not available the S corporation years. Although Kris's share of the 2018 NOL is $3,000, only $2,300 of the loss is deductible by Kris in 2018 (i.e., such that her stock basis reaches zero), with a $700 carryover.