Module 7 Textbook Problem 7 Learning Objectives: 7-6 Adjust the tax basis in a partnership interest .7-7 Apply the basis limitation on the deduction of partnership losses On January 1, Year 1, Ginger, an individual, paid $31,000 for 7 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $15,000 to Root Corp, in return for a promissory note. Root Corp. generated a $760,000 operating loss in Year 1. Root Corp. generated $424,000 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 $236,000? Complete this question by entering your answers in the tabs below. Req A and B Req C 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 Taxable income Adjusted bash: Root Stock Root Note Amount Problem: Module 7 Textbook Problem 7 Learning Objectives: . 7-6 Adjust the tax basis in a partnership interest 7-7 Apply the basis limitation on the deduction of partnership losses On January 1, Year 1, Ginger, an individual, paid $31,000 for 7 percent of the stock in Root Corp. an S corporation. In November Year 1, he loaned $15,000 to Root Corp. in return for a promissory note. Root Corp, generated a $760,000 operating loss in Year 1. Root Corp. generated $424,000 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 $236,000? Complete this question by entering your answers in the tabs below. Req A and B Rey C How would your answers to parts a and b change if Root Corp's ordinary business income was only $236,000 Taxable income Adjusted basis Root Stock Root Note Amount