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! Required information [ The following information applies to the questions displayed below. ] Birch Corporation, a calendar - year corporation, was formed three years

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[The following information applies to the questions displayed below.]
Birch Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has
operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corporation in the
amount of $7,050. Birch Corporation has paid the interest on the loan but has not yet paid any principal. (Assume the
loan qualifies as debt for tax purposes.) For the year, Birch experienced a $34,300 business loss.
What amount of the loss clears the tax-basis limitation, and what is James's basis in his Birch Corporation stock and
Birch Corporation debt in each of the following alternative scenarios?
Note: Leave no answer blank. Enter zero if applicable.
c. At the beginning of the year, James's basis in his Birch Corporation stock was $0 and his basis in his Birch Corporation debt was
$7,050.
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