Rondo and his business associate, Larry, are considering forming a business entity called R L but they are unsure about whether to form it as a C corporation, an S corporation or as an LLC Rondo and Larry would each invest $50,000 in the business Thus, each owner would take an initial basis in his ...

a 50000 C corporation shareholders do not include entity debt in the tax basis of ...

Rondo and his business associate, Larry, are considering forming a business entity called R&L but they are

Question:

Rondo and his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a C an S or as an LLC. Rondo and Larry would each invest $50,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $50,000 no matter which entity type was formed. Shortly after the formation of the entity, the business borrowed $30,000 from the bank. If applicable, this debt is shared equally between the two owners.
a. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as a C After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as an S After taking the loan into account, what is Rondo's tax basis in his R&L ownership interest if R&L is formed as an LLC?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...