Reference no: EM133455477
A calendar year S corporation has the following information for the two years:
2021 2022
Net ordinary income (or loss). . . . . . . . . . . . . . . . . . . . . . . . . $(50,000) $10,000
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 2,000
X, an unmarried 60% shareholder, has a basis in the stock on January 1, 2021, of $18,000 and a note receivable from the corporation for $12,000. X's only other income is salary from an unrelated business.
1. Calculate X's basis in the stock and in the note after the above income and loss are recorded for 2021.
2. Calculate X's basis in the stock and in the note after the above income items are recorded for 2022.
3. Assume the corporation paid the $12,000 note on April 3, 2022. Calculate X's basis in the stock after the above income distributions are recorded for 2022, and calculate the effect on X's adjusted gross income for all 2022 items, including the payment of the note.