1. 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, Jacks basis in his stock was $8,000 and his basis in his corporate debt was $4,000.

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

2. What is Jacks basis in his stock and debt at the end of year 4?

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

Please work out/explain each problem so I can see how you got the results. Also, this is Chapter 22 S Corporations. Thanks in advance!