Serena and Venus each own one-half of SouthWestern, Inc., a calendar-year S corporation. SouthWestern was  formed in 2005 and it has never been a C Corporation.  At the beginning of 2018 Serena and Venus had the following bases:

                                        Stock Basis                                          Loan Basis

            Serena                  $ 10,000                                             $ 0

            Venus                       6,500                                               5,000

SouthWestern made no distributions during the year.  No loans were repaid during the year.  SouthWestern had a AAA balance at the beginning of the year of $50,000.  During 2018 SouthWestern had the following operating items:

                               Ordinary Income                                 $  8,500

                               Interest Income                                        500

                             Net Long Term Capital Loss                 30,000

Required: 

            A.        Compute the end of year stock basis and debt basis for both of the shareholders.  

            B.        Compute the end of year AAA balance for SouthWestern. 

            C.        Describe the tax consequences to each Serena and Venus including any impact on next year.  EXPLAIN.