Lan Corp., an accrual-basis calendar-year repair service corporation, was formed and began business on January 6, 20x1. Lan's valid S corporation election took effect retroactively on January 6, 20x1. For the following problems, determine the amount, if any, using the fact pattern for each item..

1. Assume the following facts :

Pike purchased forty Lan shares on January 31, 20x1 for $4,000. Lan made no distributions to shareholders, and Pike"s 2ox1 Schedule K-1 form Lan reported

- Ordinary business loss : $(1,000)

- Municipal bond interest income : 150

What was Pike's basis in his Lan stock at December 31, 20x1?

2. Assume the following facts:

On January 6, 20x1, Taylor and Barr each owned 100 shares owned 100 shares of the 200 issued shares of Lan stock. Taylor's basis in Lan shares on that date was $10,000. Taylor sold all of his Lan shares to Pike on January 31, 20x1, and Lan made a valid election to terminate its tax year. Taylor's share of ordinary income form Lan prior to the sale was $2,000. Lan made a cash distribution of $3,000 to Taylor on January 30, 20x1.

What was Taylor's basis in Lan shares for determining gain or loss from the sale to Pike?