On January 1, Year 1, Carrot, an individual, paid $24,100 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $12,950 to Root Corp. in return for a promissory note. Root Corp. generated a $920,000 operating loss in Year 1. Root Corp, generated $427,000 ordinary business income in Year 2. Required:
a. How much of Ginger's share of this income is included in his Year 2 taxable income?
b. Compute Ginger's basis in his Root Corp, stock and his Root Corp, note at the end of Year 2
c. How would your answers to parts a and b change if Root Corp's ordinary business income was only $239,000?

Aproperty title search firm is contemplating using online software to increase its search productivity. currently an average of 40 minutes is needed to do a title search. the researcher cost is $2 per minute. clients are charged a fee of $400. company a's software would reduce the average search time by 10 minutes, at a cost of $3.50 per search. company b's software would reduce the average search time by 12 minutes at a cost of $3.60 per search. which option would have the higher productivity in terms of revenue per dollar of input?

On january 1, 2017, pharoah company issued 10-year, $2,020,000 face value, 6% bonds, at par. each $1,000 bond is convertible into 16 shares of pharoah common stock. pharoah’s net income in 2017 was $317,000, and its tax rate was 40%. the company had 97,000 shares of common stock outstanding throughout 2017. none of the bonds were converted in 2017. (a) compute diluted earnings per share for 2017. (round answer to 2 decimal places, e. g. $2.55.) diluted earnings per share

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.