Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $7,450. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $34,200 business loss.

A. At the beginning of the year, James's basis in his Birch Corp. stock was $52,700 and his basis in his Birch Corp. debt was $7,450.

Amount of loss clearing tax basis limitation:

Basis in stock:

Basis in debt:

B. At the beginning of the year, James's basis in his Birch Corp. stock was $10,200 and his basis in his Birch Corp. debt was $7,450.

Amount of loss clearing tax basis limitation:

Basis in stock:

Basis in debt:

C. At the beginning of the year, James's basis in his Birch Corp. stock was $0 and his basis in his Birch Corp. debt was $7,450.

Amount of loss clearing tax basis limitation:

Basis in stock:

Basis in debt: