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30 June, 02:25

On January 1, 2017, 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 2017. BLS generated $408,000 ordinary business income in 2018. How much of Leo's share of this income is included in his 2018 taxable income?

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  1. 30 June, 02:28
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    NONE

    Explanation:

    The BLS investment do not qualifies to use the equity-method as his percent of the comany's are below 20%

    The investment will yield a gain for Leo when it distribute dividends and from the change in the market value of the share.

    Their investment is valued at cost, it do not recognize gains for the company's income or losses.
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Home » Business » On January 1, 2017, 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 2017.
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