Allie and Monte each own 50% of Raider Corporation, an S corporation. Both individuals dynamically participate in Raider's business. On 1st January, Allie and Monte have adjusted bases for their Raider stock of $80,000 and $90,000 correspondingly. During the existing year, Raider reports the following results:
Ordinary loss $175,000
Tax-exempt interest income 20,000
Long-term capital loss 32,000
Raider's balance sheet at year-end shows the subsequent liabilities: accounts payable, $90,000; mortgage payable, $30,000; and note payable to Allie, $10,000.
a. What income and deductions will Monte and Allie report from Raider's current year activities?
b. Evaluate Monte's stock basis on December 31?
c. Determine Allie's stock basis and debt basis on December 31?
d. What loss carryovers are available for Monte and Allie?
e. Describe how the use of the losses in Part a would change if instead Raider were a partnership and Monte and Allie were partners who shared profits, losses and liabilities equally.