On January $1,$ Year $1,$ Ginger, an individual, paid $$32,000$ for $7$ percent of the stock in Root Corp, an S corporation. In November Year $1,$ he loaned $$13,000$ to Root Corp. in return for a promissory note. Root Corp. generated a $$770,000$ operating loss in Year $1.$ Root Corp. generated $$425,000$ 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 $$237,000?$

Complete this question by entering your answers in the tabs below.

Req A and $B,$ReqC

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 $2.$

$\backslash$table$[[,$Amount$],[$Taxable income,$],[$Adjustied basis,$],[$Root Stock,$],[$Root Note,$]]$