War Eagle Corp, a calendar year corporation, was formed three years ago by its sole shareholder, Jack, who has operated as an S corporation since its inception.

Last year, Jack made a direct loan to the company in the amount of $$4,000.$

War Eagle Corp has paid interest on the loan but has not yet paid any principal $($Assume the loan qualifies as debt for tax purposes$).$

In year $4,$ War Eagle Corp experiences a $$25,000$ ordinary business loss and earns $$1,000$ of tax$-$exempt income.

At the beginning of year $4,$ Jack$$s basis in his stock was $$8,000$ and his basis in his corporate debt was $$4,000.$

A$.$ What amount of loss clears the tax$-$basis limitation in year $4?$

B$.$ What is Jack$$s basis in his stock and debt at the end of year $4?$

C$.$ Identify any loss carryforward amount at the end of year $4.$

For parts D and E: In year $5,$ War Eagle Corp has an ordinary loss of $$30,000,$ tax$-$exempt income of $$4,000,$ and a $$2,000$ distribution.

D$.$ What is Jack$$s basis in his stock and debt at the end of year $5?$

E$.$ Identify any loss carryforward at the end of year $5.$

For parts F and G: Assume instead that in year $5,$ War Eagle Corp has ordinary income of $$30,000,$ tax$-$exempt income of $$4,000,$ and a $$2,000$ distribution.

F$.$ What is Jack$$s basis in his stock and debt at the end of year $5?$

G$.$ Identify any loss carryforward at the end of year $5.$