On January 2, Chaz transfers cash of $126,600 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $31,650. The income is credited to its earnings and profits account. The corporation distributes $9,495 to Chaz. If an amount is zero, enter "0".
a. Chaz has a of $________ and the corporation has a deduction of $_________ .
b. Assume, instead, that Chaz transfers to the corporation cash of $63,300 for stock and cash of $63,300 for a note of the same amount. The note is payable in equal annual installments of $6,330 and bears interest at the rate of 6%. No distributions are made during the year to Chaz. However, at the end of the year, the corporation pays an amount to meet the loan obligation.
Chaz has interest of $______________ and a note repayment of $_____________ of which $_____________ is taxable to Chaz. The corporation has a deduction of $___________ .