conditions of $ 279 but for a deduction for the interest on the obligation sti instrument. See Treas.Reg. $ 1.2791, -7. In addition, new 1630), added to the Code in 2017 and discussed in Chapter 3, imposes limitations applicable to business interest deductions more generally. on the grounds that the instrument constituted an equity $ 279, to be disallowed PROBLEM SET 3 1. George owned all of the stock of Arpix, Inc., which produces software for 3D computer animation for the film industry. George's basis in the stock was $1,000,000. George sold all of the stock to Steve for $10,000,000 in cash. At that time Arpix owed $1,000,000 to the Millennium National Bank. Arpix asset's consisted of a copyright with a basis of $500,000 and computer equipment with a basis of $50,000. (a) What is the total amount realized by George? (b) What is Steve's basis in the Arpix stock? (C) How much gain or loss does Arpix recognize? (d) What is Arpix's basis in its assets? 2. West Electric Corporation produces and sells cellular telephones. Mabel owned all of the stock of West Electric. Mabel's basis for the stock was