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Comparative Entities:

Amber has a $20\%$ ownership interest in an entity for which she initially contributed $$250,000.$ She

is one of the original owners of the business. During the life of the business the following have

occurred:

Cumulative losses of $$600,000$ during the last three years $($her share would be $$120,000)$

Profits of $$280,000$ in the current year $($her share would be $$56,000)$

The entity borrowed $$150,000$ of recourse debt

Distributions to owners of $$150,000($her share would be $$30,000)$ in the current year

Determine the tax consequences if the entity is a partnership:

a$.$ How much loss can she deduct over the three years?

b How much income will be taxable to her in the current year?

c What is the ending balance of her partnership interest $($show computations$)?$

Determine the tax consequences if the entity is a S Corporation:

a$.$ How much loss can she deduct over the three years?

b How much income will be taxable to her in the current year?

c What is the ending balance of her stockholder interest $($show computations$)?$

Determine the tax consequences if the entity is a regular Corporation:

a$.$ How much loss can she deduct over the three years?

b How much income will be taxable to her in the current year?

c What is the ending balance of her stockholder interest $($show computations$)?$

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