On January 1, Year 1, Carrot, an individual, paid $16,400 for 5 percent of the stock...
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On January 1, Year 1, Carrot, an individual, paid $16,400 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $9,350 to Root Corp. in return for a promissory note. Root Corp. generated a $752,000 operating loss in Year 1. Required: a. How much of his share of the loss can Carrot deduct on his Year 1 return? b. Compute Carrot's basis in his Root Corp. stock and his Root Corp. note at the end of Year 1. On January 1, Year 1, Carrot, an individual, paid $16,400 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $9,350 to Root Corp. in return for a promissory note. Root Corp. generated a $752,000 operating loss in Year 1. Required: a. How much of his share of the loss can Carrot deduct on his Year 1 return? b. Compute Carrot's basis in his Root Corp. stock and his Root Corp. note at the end of Year 1.
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a Since Root Corp is an S corporation Carrot can deduct his share of the opera... View the full answer
Related Book For
Principles Of Taxation For Business And Investment Planning 2016 Edition
ISBN: 9781259549250
19th Edition
Authors: Sally Jones, Shelley Rhoades Catanach
Posted Date:
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