Sonny and Cher equally own Song Corporation, an 5 corporation. Each has a $50,000 stock basis at the beginning of the year. Song Corporation has a $100,000 mortgage on its balance sheet, as well as a note payable to Cher for $25,000. During the current year, Song Corporation reports an ordinary loss of $105,000. 1. What is Sonny's stock basis at the end of the year? 2. What is Sonny's debt basis at the end of the year? 3. What loss will Sonny report on his tax return for the year? 4. What is Cher's stock basis at the end of the year? 5. What is Cher's debt basis at the end of the year? 6. What loss will Cher report on her tax return for the year?

Sonny and Cher equally own Song Corporation, an 5 corporation. Each has a $50,000 stock basis at the beginning of the year. Song Corporation has a $100,000 mortgage on its balance sheet, as well as a note payable to Cher for $25,000. During the current year, Song Corporation reports an ordinary loss of $105,000. 1. What is Sonny's stock basis at the end of the year? 2. What is Sonny's debt basis at the end of the year? 3. What loss will Sonny report on his tax return for the year? 4. What is Cher's stock basis at the end of the year? 5. What is Cher's debt basis at the end of the year? 6. What loss will Cher report on her tax return for the year?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter4: Income Exclusions

Section: Chapter Questions

Problem 56P

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