Question
Rondo and his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a
Rondo and his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a C corporation, an S corporation or as an LLC. Rondo and Larry would each invest $67,500 in the business. Thus, each owner would take an initial basis in his ownership interest of $67,500 no matter which entity type was formed. Shortly after the formation of the entity, the business borrowed $33,500 from the bank. If applicable, this debt is shared equally between the two owners. |
a. | After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as a C corporation?
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