Problem 22-56 (LO 22-4) (Algo)

Jessica is a one-third owner in Bikes-R-Us, an S corporation that experienced a $46,500 loss this year (year 1). Assume her stock basis is $10,600 at the beginning of the year and that at the beginning of year 1 Jessica loaned Bikes-R-Us $3,150. In year 2, Bikes-R-Us reported ordinary income of $12,300. (Leave no answer blank. Enter zero if applicable.)

Required: Please show all your work What amount is Jessica allowed to deduct in year 1? What are her stock and debt bases in the corporation at the end of year 1? What are her stock and debt bases in the corporation at the end of year 2?

Please show all your work

	year 1	year 2
a. deductible amount
b-c. stock basis
b-c. debt basis