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Problem: Module 7 Textbook Problem 7 Learning Objectives: -7.6 Adjust the tax basis in a partnership interest -7.7 Apply the basis limitation on the deduction

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Problem: Module 7 Textbook Problem 7 Learning Objectives: -7.6 Adjust the tax basis in a partnership interest -7.7 Apply the basis limitation on the deduction of partnership losses On January 1, Year 1, Ginger, an individual, paid $20,000 for 5 percent of the stock in Root Corp., an $ corporation. In November Year 1 he loaned $9,000 to Root Corp, in return for a promissory note. Root Corp. generated a $650,000 operating loss in Year 1 . Root Corp. generated $413,000 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 $225,000 ? Complete this question by entering your answers in the tabs below. 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. Problem: Module 7 Textbook Problem 7 Learning Objectives: - 7.6 Adjust the tax basis in a partnership interest -7.7 Apply the basis limitation on the deduction of partnership losses On January 1, Year 1, Ginger, an individual, paid $20,000 for 5 percent of the stock in Root Corp., an 5 corporation. In November Year 1, he loaned $9,000 to Root Corp. In return for a promissory note. Root Corp. generated a $650,000 operating loss in Year 1 . Root Corp, generated $413,000 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 $225,000 ? Complete this question by entering your answers in the tabs below. How would your answers to parts a and b change if Root Corp.'s ordinary business income was only $225,000

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