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Business, 06.08.2021 21:00 klk597703

On January 1, Year 1, Carrot, an individual, paid $24,100 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $12,950 to Root Corp. in return for a promissory note. Root Corp. generated a $920,000 operating loss in Year 1. Root Corp, generated $427,000 ordinary business income in Year 2. Required:
a. How much of Ginger's share of this income is included in his Year 2 taxable income?
b. Compute Ginger's basis in his Root Corp, stock and his Root Corp, note at the end of Year 2
c. How would your answers to parts a and b change if Root Corp's ordinary business income was only $239,000?

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On January 1, Year 1, Carrot, an individual, paid $24,100 for 5 percent of the stock in Root Corp.,...

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