On January 1, 2021, Leo paid $28,000 for 6 percent of the stock in BLS,...
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Accounting
On January 1, 2021, Leo paid $28,000 for 6 percent of the stock in BLS, an S corporation. In November, he loaned $10,000 to BLS in return for a promissory note. BLS generated a $730,000 operating loss in 2021. BLS generated $421,000 ordinary business income in 2022.
Required:
A. How much of Leos share of this income is included in his 2022 taxable income?
B. Compute Leos 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 BLSs ordinary business income was only $233,000?
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