How much share of this income is included taxable income

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On January 1, 2015, 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 2015. BLS generated $408,000 ordinary business income in 2016.

a. How much of Leo’s share of this income is included in his 2016 taxable income?

b. Compute Leo’s basis in his BLS stock and his BLS note at the end of 2016.

BLS Stock BLS Note

Adjusted Basis ?

Reference no: EM131292328

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