Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in 2022. Required: a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000? Complete this question by entering your

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ef 250.

On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in
return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in
2022.
Required:
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000?
Complete this question by entering your answers in the tabs below.
Req A and B
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
Taxable income
Adjusted basis
BLS Stock
BLS Note
Req C
On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in
return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in
2022.
Amount
Required:
a. How much of Leo's share of this income is included in his 2022 taxable income?
b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022.
c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000?
Req A and B
Complete this question by entering your answers in the tabs below.
Taxable income
Adjusted basis
BLS Stock
BLS Note
Req C
How would your answers change if BLS's ordinary business income was only $220,000?
Amount
Transcribed Image Text:On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in 2022. Required: a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000? Complete this question by entering your answers in the tabs below. Req A and B a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. Taxable income Adjusted basis BLS Stock BLS Note Req C On January 1, 2021, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000 operating loss in 2021. BLS generated $408,000 ordinary business income in 2022. Amount Required: a. How much of Leo's share of this income is included in his 2022 taxable income? b. Compute Leo's basis in his BLS stock and his BLS note at the end of 2022. c. How would your answers to parts a and b change if BLS's ordinary business income was only $220,000? Req A and B Complete this question by entering your answers in the tabs below. Taxable income Adjusted basis BLS Stock BLS Note Req C How would your answers change if BLS's ordinary business income was only $220,000? Amount
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