Sigma Corporation, an S corporation with one shareholder, incurred the following items Year 1 and Year 2:

Question:

Sigma an S with one shareholder, incurred the following items Year 1 and Year 2:
Year 1
Tax-exempt income ……………………… $ 5,000
Ordinary income ………………………… 30,000
Year 2
Ordinary loss …………………………….($40,000)
Cash ………………………… 15,000
At the beginning of Year 1, the had AAA and OAA balances of zero and accumulated E&P of $6,000. At the beginning of Year 1, the shareholder had a $10,000 basis in stock and a $12,000 basis in debt he loaned to the Determine items reported by the shareholder in Year 1 and Year 2.
b. Determine the balances in each corporate account and the shareholder’s stock and debt bases at the end of each year.
c. Determine the results if the in Year 2 is $35,000 instead of $15,000.
d. How does the answer to Part c change if, in Year 2, the has an $18,000 long-term capital gain in addition to the $40,000 ordinary loss? Corporation
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