Birch Corporation, a calendar-year corporation, was formed three years ago by its sole shareholder, James, who hasoperated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corporation in the amountof $6,350. Birch Corporation has paid the interest on the loan but has not yet paid any principal. (Assume the loanqualifies as debt for tax purposes.) For the year, Birch experienced a $29,800 business loss.What amount of the loss clears the tax-basis limitation, and what is James's basis in his Birch Corporation stock and BirchCorporation debt in each of the following alternative scenarios?Note: Leave no answer blank. Enter zero if applicable.8. At the beginning of the year, James's basis in his Birch Corporation stock was $53,100 and his basis in his Birch Corporation debtwas $6,350.Amount of loss clearing tax basis limitationBasis in stockBasis in debt b. At the beginning of the year, James's basis in his Birch Corporation stock was $12,300 and his basis in his Birch Corporation debtwas $6,350Amount of loss clearing tax basis limitationBasis in stockBasis in debt

The amount of loss clearing tax basis limitation is $29,800. $29,800 is the business loss…

a. At the beginning of the year, James's basis in his Birch Corporation stock was $53,100 and his basis in his Birch Corporation debt was $6,350. Amount of loss clearing tax basis limitation Basis in stock Basis in debt

a. At the beginning of the year, James's basis in his Birch Corporation stock was $53,100 and his basis in his Birch Corporation debt was $6,350. Amount of loss clearing tax basis limitation Basis in stock Basis in debt

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 34P

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