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 $18,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $9,000 to Root Corp. in return for a promissory note. Root Corp. generated a $630,000 operating loss in Year 1. Root Corp generated $411,000 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 $223,000? 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. 4 Che

Problem: Module 7 Textbook Problem 7 Leorning Objectives: - 7.6 Adjust the tax basis in a partnership interest -7-7 Apply the basis limitation on the deduction of portnership losses On January 1. Year 1, Ginger, an individual, paid $18,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1. he loaned $9,000 to Root Corp. In return for a promissory note. Root Corp generated a $630,000 operating loss in Year 1 . Root Corp generated $411,000 ordinary business income in Year 2. Required: o. 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 $223,000 ? Complete this question by entering your answers in the tabs below. 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 tt the end of Year 2