Question

Jason Thomas has invested $200,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Thomas stand to lose?

Answer 1

Answer: $200,000

Step-by-step explanation:

As this is a privately held corporation, the shareholders are not personally liable in the case of bankruptcy as they are separated from the business.

However, they will incur some liability which will be up to the extent of the money that they invested. In this case Jason invested $200,000 so should the company declare bankruptcy, Jason is liable up to only the amount that Thomas invested which would be $200,000.