b

On January 1, Year 1. Ginger, an individual, paid $20,000 for 5 percent of the stock in Root Corp. an corporation. In November Year 1. he loaned $9,000 to Root Corp. in return for a promissory note. Root Corp. generated a $650,000 operating loss in Year 1. Root Corp. generated $413,000 ordinary business income in Year 2. Required: a. How much of Ginger's share of this income is included in his Year 2 taxable income? b. Compute Ginger's basis in his Root Corp. stock and his Root Corp, note at the end of Year 2. c. How would your answers to parts a and b change if Root Corp's ordinary business income was only $225,000? Complete this question by entering your answers in the tabs below. Reg A and B Reg C a. How much of Ginger's share of this income is included in his Year 2 taxable income? b. Compute Ginger's basis in his Root Corp, stock and his Root Corp. note at the end of Year 2. Amount 5 20,650 Taxable income Adjusted basis Root Stock Root Note Regc> Req A and B ReqC How would your answers to parts a and b change if Root Corp's ordinary business income was only $225,000? Amount Taxable income Adjusted basis Root Stock Root Note