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Business, 06.08.2021 17:10 Inriso

On January 1, Year 1, Radish, an individual, paid $15,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $8,000 to Root Corp. in return for a promissory note. Root Corp. generated a $600,000 operating loss in Year 1. Root Corp. generated $220,000 ordinary business income in Year 2. In Year 3, Root Corp. repaid its $8,000 debt to Radish before he restored any basis in the debt. Required:
How much gain or loss, if any, will Radish recognize as a result of the debt repayment in Year 3?

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On January 1, Year 1, Radish, an individual, paid $15,000 for 5 percent of the stock in Root Corp.,...
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