im Oza owns all of the stock in Drake, a calendar year S corporation. For calendar year 2021, Drake anticipates an operating loss of $160,000 and could, if deemed worthwhile, sell a stock investment that would generate a $10,000 long-term capital loss. Jim has an Idjusted basis of $100,000 in the Drake stock. For the year, he has already realized a short-term capital gain of $7,000. He anticipates no ther capital asset transactions and expects to be in the 35% tax bracket in 2021 . Complete the accountant's letter suggesting a course of action that could save Jim Oza some income taxes. SWFT, LLP 5191 Natorp Boulevard Mason, OH45040 November 10, 2021 Jim Oza 470 Bay Avenue Bedford, MA 01730 Dear Jim: A review of your financial transactions for 2021 and those of Drake Corporation reveals several attractive year-end planning procedures. Because you are in the 35% tax bracket, every dollar of Drake Corporation's projected loss of which you can take advantage saves cents in taxes. However, any loss pass-through is limited to your . Of the potential $170,000, you can claim $ To claim the entire loss, your basis in Drake needs to increase. There are some reasonable alternatives by which you can increase your basis: (1) make a capital contribution to Drake of cash or property with a basis of at least $ or (2) enter into a bona fide loan of $ to Drake. Both of these will increase your basis in your Drake investment. The offsets an $7,000 short-term capital gain that would have been taxed as Furthermore, it provides you with an extra $ of capital loss that can offset other income. If you want further information regarding how these transactions should be structured, please contact me