Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in 2022. Required: a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000? Complete this question by entering your
Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in 2022. Required: a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000? Complete this question by entering your
Chapter16: Tax Research
Section: Chapter Questions
Problem 69EDC
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Ef 250.
Transcribed Image Text:On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in
return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in
2022.
Required:
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000?
Complete this question by entering your answers in the tabs below.
Req A and B
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
Taxable income
Adjusted basis
BLS Stock
BLS Note
Req C
On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in
return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in
2022.
Amount
Required:
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000?
Req A and B
Complete this question by entering your answers in the tabs below.
Taxable income
Adjusted basis
BLS Stock
BLS Note
Req C
How would your answers change if BLS's ordinary business income was only $220,000?
Amount
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